Armenian Central Bank improves dramatically its growth forecast for 2022

YEREVAN, September 13. /ARKA/. Armenia's Central Bank has again revised upwards its economic growth forecast for 2022 from 4.9% to 12.9%, the Chairman of the Central Bank Martin Galstyan said at a press conference today.

According to Galstyan, the upward revision was prompted by strong growth in demand. "There are huge changes in the area of services, significant changes are registered also in the construction sector. There are also certain changes in the industry," he said.

According to him, this is the reason for the rising prices not only for non-food items, but also for services.

"This situation is causing some concerns that inflation expectations, which remain high, will continue," Galstyan said, adding that the regulator's decision to raise the refinancing rate by 0.5% point today to 10% is based on this logic.

According to the Central Bank, high growth is driven by demand factors, also by a significant inflow of foreign visitors and remittances.

The Central Bank's growth forecast for services sector is 19.4%, up from the previous projection of 7.5%, the forecast for construction sector is 14.1%, up from 8.9%), and the forecast for industry is 3.2%, up from the previous forecast of 1% decline.

Armenian government’s growth projection for 2022 is 7%; the inflation is set at 4% (± 1.5%). According to the World Bank’s latest Global Economic Prospects report, Armenia's GDP in 2022 is expected to grow by 3.5%, down 1.3 p.p. from the previous forecast, made in January.

World Bank analysts expect Armenia's GDP to grow by 4.6% in 2023 (0.8 p.p. down from the January forecast) and by 4.9% in 2024.

The International Monetary Fund (IMF) expects Armenia's GDP growth to reach 5 percent in 2022, while inflation is projected to increase temporarily before moderating by the end of the year.-0-