Armenia to face GDP decrease this year because of COVID-19 – deputy minister

YEREVAN, June 24. /ARKA/. Armenia expects a decline in nominal GDP this year because of the coronavirus, Deputy Finance Minister Armen Hayrapetyan said Wednesday in the National Assembly at an extraordinary parliamentary session.

He recalled that on April 29, the lawmakers adopted amendments to the state budget, which allow attracting more funds to finance the deficit and adhere to an expansionary policy regarding expenses.

"This is due to shocks in the international economy and restrictions in the internal prompted by the coronavirus, which affected the planned indicators," Hayrapetyan said.

In particular, he said, the decline in external demand led to a decrease in exports, in remittances and in the level of tourism, and many manufacturing sectors within the country were limited in activity, which is thought to result in a 2% decline in GDP, despite the fact that a 4.9%.increase was forecasted previously.

"Therefore, the nominal GDP will also decrease. It was planned that by the end of 2020 it will reach 7.1 trillion drams, while now, by current estimates, it will reach only 6.5 trillion drams," Hayrapetyan said.

Macroeconomic Forecast

In the 2020 government budget approved at the end of last year, economic growth in Armenia was projected at 4.9%, and inflation at 4% (± 1.5%). The budget revenue projected at  1.69 trillion drams and expenditure at 1.85 trillion drams. The budget deficit was laid in the amount of 160.7 billion drams.

On April 29, the National Assembly of Armenia approved the revision of budget indicators prompted by the spread of COVID-19. Given the adverse effects of the situation with coronavirus, the budget forecast for GDP is reduced to a decline of 2%, and the deficit is increased to 340 billion drams, this figure will be 5% of GDP (previously 2.3%). The expenditure indicator was left unchanged. Given forecasts of a decrease in tax revenues from the expected 22.6% of GDP to 22.1% of the revised GDP, state budget revenues are expected to decrease. Tax revenue will reduce by 169.1 billion drams to 1 trillion 433 billion drams.

COVID-19 Situation

A state of emergency was declared in Armenia on March 16, 2020 to curb the spread of the coronavirus, and then extended three times. The latest decision, dated from June 12, extends the state of emergency until 17:00 July 13.
According to the latest official report issued Wednesday morning, 21,717 confirmed COVID-19 infection cases, 10,797 recovery cases and 386 deaths have been recorded in Armenia. --0----