YEREVAN, October 8. / ARKA /. The Asian Development Bank has revised upward its GDP growth forecast for Armenia in 2012 from the previous 3.8% to 4.3%, according to its updated Asian Development Outlook.
During an extraordinary Cabinet meeting June 18, Armenian President Serzh Sargsyan said the government should work to secure a 7% GDP expansion this year, up from the government-projected 4.2 percent. In 2011 Armenia’s economic expansion was 4.6 percent.
According to the updated Asian Development Outlook report, the revision of Armenia’s forecast was prompted by higher than expected economic growth in the first quarter.
The report also says that due to favorable trends in agriculture, industry, exports and consumption, the 2013 forecast has been raised from 4.2% to 4.5%. "This suggests that the growth will not be slowed down because of weakening prospects for the European economy, which accounts for 60% of Armenia’s exports, and the possible influence of the situation in the euro area on the weakening of the Russian economy, which accounts for 80% of incoming private transfers to Armenia", the report says.
The report also says the average inflation rate fell to 2.2% in the first half of 2012, accompanied by agricultural recovery, slowing growth in food prices and supplies, as well as appropriate monetary policy.
However, the ADB forecast for inflation has not changed and remains at 4.1% for 2012 and 4.5% for 2013, as "inflationary pressures may return because of depreciation of the Armenian dram against the U.S. and the possible impact of the drought on the world wheat market.”.
The ADB also points out reduction of the budget deficit to 2.8% of GDP in 2011 from 5% in 2010, as well as bringing down the current account deficit to 10.9% of GDP in 2011 from 14.8% in 2010 due to faster growth in exports than imports.
The report says the current account deficit is likely to drop further to 10.2% of GDP in 2012 and to 9.8% - in 2013 in anticipation of future higher exports, an increase in remittances, as well as the improvement of the business environment. -0-