Armenia’s Central Bank Once Again Revises Economic Outlook

YEREVAN (RFE/RL)—Armenia’s economic recovery will slightly slow down in the second half of this year and result in a full-year GDP growth of up to 6.2. percent, the Armenian Central Bank said on Thursday.

According to official statistics, the Armenian economy expanded by 6.7 percent in the first half after contracting by as much as 14.4 percent last year. Finance Minister Tigran Davtian said in June that the growth will continue in the following months.

The International Monetary Fund expects a GDP increase of only about 5 percent in 2010. The Central Bank also came up with more cautious forecasts in a Thursday report outlining its monetary policy in the third quarter of 2010. The report projects a full-year growth rate of between 5.7 percent and 6.2 percent.

Still, the figures represent a significant upward change in the bank’s previous growth forecast of between 3 percent and 4 percent made in May. Both the bank and the Armenian government predicted a much slower recovery in January.

“The whole world has been revising its projections on a monthly basis because there is a lot of uncertainty,” Vache Gabrielian, the Central Bank’s deputy governor, told RFE/RL’s Armenian service.

The Central Bank board decided on Wednesday not to change its refinancing rate currently set at 7.25 percent. It had steadily raised the benchmark rate by a total of 200 basis points earlier this year amid mounting inflationary pressures on the Armenian economy.

According to the National Statistical Service (NSS), consumer price inflation in the country stood at 7.3 percent in the first half, well above the Armenian authorities’ target band of 2.5-5.5 percent. The authorities hope to bring the inflation rate down to about 6 percent by the end of the year.

NSS data shows consumer prices slowly falling since April, something which is strongly disputed by economists critical of the government. Many ordinary Armenians also feel that the cost of living in the country has continued to increase in recent months.

Gabrielian insisted on the reality of the official inflation figures. “Inflation is a phenomenon which is calculated in average terms and can not correspond to the experience of a concrete individual,” he said. “From our perspective, [the data] reflects the current consumer price index fluctuations quite accurately.”


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