EDB report highlights economic growth risks for Armenia due to sector concentration

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YEREVAN, August 5. /ARKA/. The Eurasian Development Bank (EDB) raised concerns about the sustainability of Armenia's economic growth due to its heavy concentration in a few sectors in its latest macroeconomic forecast.nbsp;/pp

While the baseline scenario projects GDP growth of 7.5% in 2024 and 4.2% in 2025, significant risks remain. The EDB report attributes Armenia's impressive economic performance in the first half of 2024 mainly to increased production and export of jewelry. However, the report warns that if this growth driver proves short-lived, the economy could face a much slower growth rate than projected./pp

Other risks include a potential slowdown in the global economy and in major trading partner countries. High interest rates in developed countries and structural issues in the Chinese economy could dampen consumer and investment activity, which would impact demand for energy resources and the Russian economy. This scenario could reduce external demand and remittance levels for Armenia, increasing devaluation pressure on the Armenian dram./pp

The EDB further notes that the economic growth driver of 2022–2023 might become a risk factor. Capital and labor resource outflows pose significant threats to the economy and the stability of the national currency. A net outflow of cross-border remittances could lead to a sharp depreciation of the dram and a spike in prices./p br