Economist doubts Armenia can achieve 7% economic growth in 2024

YEREVAN, March 29. /ARKA/. Armenia’s economic growth in recent years has been driven by the services and construction sectors, whose growth was prompted in turn by the inflow of capital from abroad, largely from Russia, economist Aghasi Tavadyan said in an interview with 1in.am.

"In 2023, the country’s financial and banking sector was the only one that posted a decline. There were two main reasons for this: first, the loss of Nagorno-Karabakh, when the banking sector had to write off assets for a large amount, and second, the capital exodus and the slowdown in attracting capital," Tavadyan said.

He noted that in general, the capital outflow has surged by 55%; capital is leaving Armenia for different countries, including small ones, which raises a number of questions.

"If the growth is to be ensured by the amounts coming from outside, and the inflow has dropped and the banking sphere demonstrates a decline, a question arises about how the government is going to achieve the planned 7% growth in 2024," Tavadyan said.

At the same time, the economist noted that the average growth rate of the Armenian economy is 4%, and this figure cannot be changed in the absence of qualitative changes, of which, according to him, there are none.

"If we don't have 7% growth, but reasonable average 4%, it will mean that AMD 80 billion less taxes will be collected and the government will have to withdraw money from its Reserve Fund. And if the growth is below 4%, the Fund will be completely exhausted and we will be forced to increase foreign debt - this is a problem," Tavadyan said.-0-