EBRD improves Armenia's economic growth forecast for 2025, but points to risks
YEREVAN, February 28. /ARKA/. The European Bank for Reconstruction and Development (EBRD) expects Armenia's GDP growth to reach 5% by the end of 2025 and 4.5% by the end of 2026. This forecast is included in the EBRD's "Regional Economic Prospects. February 2025" report.
In the previous similar forecast published last September, the growth forecast for Armenia's economy in 2025 was 4.8%.
"Economic activity in Armenia is slowing towards its long-term growth potential after two years of rapid growth. Real GDP grew by 5.9% year-on-year in the first three quarters of 2024 and is estimated to have grown by 5.7% for the year as a whole, down from 8.3% in 2023. This slowdown reflects lower capital inflows, a diminishing impact from highly skilled Russian migration, and slower growth in trade and ICT services," the EBRD report states.
The report further notes that inflation remains well below the Central Bank of Armenia's revised target of 3% (±1%).
"In January 2025, inflation stood at 1.7% year-on-year, and in 2024, it averaged 0.3%, significantly lower than the 2% recorded in 2023. To support economic activity, the Central Bank of Armenia reduced its key interest rate by 25 basis points in December 2024 and another 25 basis points in February 2025, bringing the rate to 6.75%. This marked the 14th rate cut since June 2023," the report states.
EBRD analysts also point out that public investment, projects supported by international financial institutions, and infrastructure expansion will continue to drive economic activity.
"A potential breakthrough in border negotiations with Turkey could enhance Armenia's position in East-West transit and stimulate regional trade integration. However, geopolitical volatility remains a significant downside risk, as delays in peace talks with Azerbaijan could undermine economic stability," the report adds.
Economic forecasts for Armenia:
Armenia's economic growth is projected at 5.1% in the 2025 state budget. Preliminary data from Armstat shows that economic activity grew by 7.1% in January. According to the Central Bank’s monetary policy report for the fourth quarter of 2024, Armenia's GDP growth is expected to be between 7.1% and 4.8% by the end of 2025, 4.7% to 7% in 2026, and 5% to 6.2% in 2027.
The Eurasian Development Bank (EDB) forecasts a 5.5% GDP growth for Armenia in 2025. The World Bank (WB) expects a 5% growth, the International Monetary Fund (IMF) forecasts 4.9%, the EBRD expects 5% (with 4.5% in 2026), and the Asian Development Bank (ADB) anticipates a 6% growth. According to Fitch Ratings, Armenia's economy is expected to grow by 4.9% in 2025, while the United Nations forecasts a 5.2% growth in 2025 and 4.7% in 2026.
