Central Bank expects business entities in Armenia to reduce commodity prices, but sees obstacles

YEREVAN, November 1. /ARKA/. The head of Armenia’s Central Bank Martin Galstyan told a press conference today that the regulator expects a slight decline in prices next year in the global commodity markets.

‘Naturally, it is very difficult to predict processes that are outside the economic sphere. For example, Russia the day before announced its withdrawal from the "grain deal," he said. 

But, according to Galstyan, given the current trends, one can expect softer scenarios in 2023 in commodity markets as the growth of economies is shrinking.

"In both the U.S., the eurozone and China, we expect much lower economic growth," he said.

According to the Central Bank chairman, these demand restraints should lead to a certain decline in commodity prices.

Talking about how this all may translate into local prices in Armenia, Galstyan said on the one hand, the dram is strengthening, including against the euro, which, in turn, is losing against the dollar.

"Our expectations are that business entities will have to adjust their prices downward. The main factor that can slow down this process or prevent it is the enormous demand, which is driven by international visitors. The economy is overheated: there are queues in the stores and the prices of goods and services are increasing," he said.

Summing up, Galstyan noted that the supply side will show positive dynamics and the main question is how long and to what extent the high demand will be maintained.

"Our actions are aimed precisely at curbing that demand and the overheating to some extent," he said.

Armenia's economic activity grew 14.1 percent in January-September 2022 compared to the same period in 2021. The 12-month inflation in September 2022 amounted to 9.9%. -0-