In its latest “Regional Economic Prospects in the EBRD Regions November 2018” the European bank for Reconstruction and Development notes that Armenia’s economy is growing rapidly.
‘Following a near stagnation in 2016, real GDP growth accelerated from 7.5 per cent in 2017 to an estimated 8.3 per cent year-on-year in the first half of 2018. Household consumption, capital investment and exports all contributed strongly to economic growth. Capital investments increased by 7.7 per cent in 2017 after eight years of decline (with the exception of 2015) and picked up further to an estimated 14.7 per cent year-on-year growth in the first half of 2018,’ the report says.
It says further that the growth of money transfers from abroad continued in the first eight months of 2018, although at a more moderate rate of 4.9 per cent year-on-year. Inflation has been gradually accelerating closer to the central bank’s inflation target, standing at 2.6 per cent in the first nine months of 2018.
Meanwhile, the Central Bank of Armenia has been able to maintain the policy rate at the lowest level since the beginning of 2010. The loan portfolio of commercial banks expanded by 10.2 per cent in 2017 and by a further 11.3 per cent in January-September 2018.
Thus far, the pace of growth has been largely unaffected by the political uncertainty, while governance reforms initiated after the “Velvet Revolution” are expected to provide a stimulus to the economy. We forecast Armenia’s real GDP to grow by 5.5 per cent in 2018 and by 5.0 per cent in 2019. At the same time, weak agricultural outturns might weigh down growth this year. The volume of agricultural output contracted by 4.8 per cent year-on-year in the first nine months of 2018. Conflict in the Nagorno-Karabakh region poses a risk to the growth outlook.
According to the EBRD report, Kazakhstan’s GDP in 2018 is projected to grow by 4%, Belarus’ – by 3%, Azerbaijan’s by – 1.5%, Kyrgyzstan’s – by 2.7%, Ukraine’s – by 3.5%, Georgia’s – by 4.5%. Moldova’s – by 4%, Tajikistan’s – by 6.1% and Uzbekistan’s – by 5%.
