YEREVAN, May 13. /ARKA/. Armenia's GDP growth is expected to speed up this year to 4.8%, Eurasian Development Bank's analysis division says in its regular CIS Macro Monitoring.
According to the analysis, economic activity index rose 3.2% in February 2014, compared with Feb 2013.
This improvement was ensured by agriculture, which accounted for 7.2% growth, and the services sector (5.8% growth). Besides, construction gained momentum after years of flagging and showed 2.3% growth in February 2014.
Improvement in the mentioned sector came amid a five-percent decline in the industry and 4.2% slowdown in trade. As a result, the economic activity index stood at 2.4% in January and February 2014.
Analysts at the Eurasian Development Bank find this improvement not sufficient to speed up GDP growth considerably. They think GDP growth will remain slow.
The bank's experts also pointed out that Armenia’s payment balance worsened in January 2014. The downward trend was blamed on decreasing profits from financial operations against the backdrop of falling foreign trade deficit as well as by a 26 percent rise in remittances ($78.6 million) in annual terms.
They also said the inflow of investments continues dwindling as outflow of capital is intensifying and after the increase in amounts of foreign borrowings slowed down in 2013. These factors explain the Armenian national currency's downward motion.
“The present structural and institutional problems keep the Armenian dram’s rate dependent on outside factors and probability of increase of the country’s foreign debt,” they say in their report.
According to the bank’s analysts forecast, the government budget deficit will widen to 2.3% of GDP in 2014 spurring economic activity but weakening the country’s ability to resist adverse impacts coming from the outside.
The authors of the report predict that the achievement of arrangements on natural gas supply and Russia's decision to lift customs duty on oil products will have favorable impacts on inflation, which will return to the projected rate.
They also say that the increase of customs duties may carry a short-term risk in 2014.
In the 2014 government budget, GDP growth is projected at 5.2% and inflation rate at 4% (±1.5%). -0---