EBRD leaves Armenia’s economic growth forecast unchanged for 2025 and 2026, but points out risks
13.05.2025,
14:58
The European Bank for Reconstruction and Development (EBRD) expects Armenia’s GDP growth to be 5% by the end of 2025 and 4.5% by the end of 2026.
YEREVAN, May 13. /ARKA/. The European Bank for Reconstruction and Development (EBRD) expects Armenia’s GDP growth to be 5% by the end of 2025 and 4.5% by the end of 2026. This forecast is contained in the EBRD’s report “Regional Economic Prospects. May 2025”.
In the previous similar report, published in February last year, the forecasts for the current and next year were the same.
“Economic growth in Armenia is slowing towards its long-term potential after two years of rapid expansion. “Real GDP grew by 5.9% in 2024, compared with 8.3% in 2023 and 12.6% in 2022, reflecting lower capital inflows from Russia, a diminishing impact of highly skilled Russian migration, and slower growth in trade and ICT services,” the study says.
EBRD analysts note that the slowdown reflects a slowdown in domestic demand as the effects of earlier capital and labour inflows from Russia fade, as well as the impact of higher US import duties on external demand.
At the same time, as noted in the report, inflation remains within the Central Bank of Armenia’s revised target range of 3% (±1%).
“Headline inflation accelerated to 3.3% year-on-year in March 2025, compared with an average of 0.3% in 2024, driven mainly by food and utility prices. To support economic activity, the Central Bank of Armenia cut its key interest rate by 25 bps to 6.75% in February 2025. This was the 14th rate cut since June 2023, when the rate was 10.75%,” the report says.
It is noted that economic activity in Armenia will continue to be supported by public investment, projects supported by international financial institutions, and infrastructure expansion.
“A potential breakthrough in border negotiations with Turkey could strengthen Armenia’s position in East-West transit and boost regional trade integration. However, geopolitical volatility remains a key downside risk, as delays in completing peace talks with Azerbaijan could undermine economic stability,” the EBRD analysts say.
Figures and forecasts for the Armenian economy and inflation
Armenia’s economic growth in the state budget for 2025 is envisaged at 5.1%. According to the Central Bank's monetary policy report for the first quarter of this year, Armenia's GDP growth is expected to be within 7-4.8% by the end of 2025, 4.7-4.1% in 2026, and 4.7-6.1% in 2027.
The EDB forecasts Armenia's GDP growth at 5.5% in 2025. The WB expects Armenia's economy to grow by 4% in 2025, the IMF by 4.5%, the EBRD by 5%, and the ADB by 6%. According to the forecast of Fitch Ratings, Armenia's economy will grow by 4.9% in 2025, and the UN expects the Armenian economy to grow by 5.2% in 2025.
The inflation rate in the Armenian state budget for 2025 is set at 3% (±1%). Inflation in Armenia in April amounted to 3.2% y/y after 3.3% y/y a month earlier. According to the Central Bank's report on monetary policy for the first quarter of this year, by the end of 2025, inflation in Armenia is expected to be within 2.6-2.4%, the forecast for 2026 is 3.1-2.9%, and for 2027 - 3%. The World Bank expects inflation in Armenia in 2025 to be 3.5%. The IMF predicts that prices in Armenia will grow by 3.3% in 2025. According to ADB forecasts, inflation in Armenia in 2025 will be 2.5%. The EDB expects inflation in Armenia at the level of 3.1% by the end of the current year. -0-
In the previous similar report, published in February last year, the forecasts for the current and next year were the same.
“Economic growth in Armenia is slowing towards its long-term potential after two years of rapid expansion. “Real GDP grew by 5.9% in 2024, compared with 8.3% in 2023 and 12.6% in 2022, reflecting lower capital inflows from Russia, a diminishing impact of highly skilled Russian migration, and slower growth in trade and ICT services,” the study says.
EBRD analysts note that the slowdown reflects a slowdown in domestic demand as the effects of earlier capital and labour inflows from Russia fade, as well as the impact of higher US import duties on external demand.
At the same time, as noted in the report, inflation remains within the Central Bank of Armenia’s revised target range of 3% (±1%).
“Headline inflation accelerated to 3.3% year-on-year in March 2025, compared with an average of 0.3% in 2024, driven mainly by food and utility prices. To support economic activity, the Central Bank of Armenia cut its key interest rate by 25 bps to 6.75% in February 2025. This was the 14th rate cut since June 2023, when the rate was 10.75%,” the report says.
It is noted that economic activity in Armenia will continue to be supported by public investment, projects supported by international financial institutions, and infrastructure expansion.
“A potential breakthrough in border negotiations with Turkey could strengthen Armenia’s position in East-West transit and boost regional trade integration. However, geopolitical volatility remains a key downside risk, as delays in completing peace talks with Azerbaijan could undermine economic stability,” the EBRD analysts say.
Figures and forecasts for the Armenian economy and inflation
Armenia’s economic growth in the state budget for 2025 is envisaged at 5.1%. According to the Central Bank's monetary policy report for the first quarter of this year, Armenia's GDP growth is expected to be within 7-4.8% by the end of 2025, 4.7-4.1% in 2026, and 4.7-6.1% in 2027.
The EDB forecasts Armenia's GDP growth at 5.5% in 2025. The WB expects Armenia's economy to grow by 4% in 2025, the IMF by 4.5%, the EBRD by 5%, and the ADB by 6%. According to the forecast of Fitch Ratings, Armenia's economy will grow by 4.9% in 2025, and the UN expects the Armenian economy to grow by 5.2% in 2025.
The inflation rate in the Armenian state budget for 2025 is set at 3% (±1%). Inflation in Armenia in April amounted to 3.2% y/y after 3.3% y/y a month earlier. According to the Central Bank's report on monetary policy for the first quarter of this year, by the end of 2025, inflation in Armenia is expected to be within 2.6-2.4%, the forecast for 2026 is 3.1-2.9%, and for 2027 - 3%. The World Bank expects inflation in Armenia in 2025 to be 3.5%. The IMF predicts that prices in Armenia will grow by 3.3% in 2025. According to ADB forecasts, inflation in Armenia in 2025 will be 2.5%. The EDB expects inflation in Armenia at the level of 3.1% by the end of the current year. -0-
