EDB lowers Armenia's GDP growth forecast for 2024 to 6%, but raises it for 2025 to 5.5%
ALMATY (Kazakhstan), December 5. /ARKA/. The Eurasian Development Bank (EDB) has revised its forecast for Armenia's GDP growth, lowering it for 2024 from 7.5% to 6%, while raising its forecast for 2025 from 4.2% to 5.5%. Additionally, the EDB expects Armenia's economy to grow by 5.3% in 2026 and 5.0% in 2027.
"The forecast has been lowered, taking into account the revision of GDP data for the first quarter of 2024 and the reduced contribution of the precious metals processing and export sector to the formation of added value," the bank's macroeconomic forecast for 2025-2027 states.
It is noted that while the pace of economic growth slowed in 2024, it remained strong. From January to October, the economic activity indicator increased by 8.1% year-on-year (4.2% y/y in October). The main contributors to economic growth in the first ten months of this year were the trade (18.8% y/y), services (5.8% y/y), and industry (11.7% y/y) sectors.
At the same time, according to the review, industrial dynamics have been weakening since the end of the second quarter due to a slowdown in the growth of manufacturing industries. While at the end of the first quarter they accounted for nearly 40% of economic activity, from June to October, their contribution was small (on average, 0.8 percentage points, or about 11% of economic activity).
According to EDB estimates, the slowdown in industry was largely offset by an acceleration in the services sector during the summer months and at the beginning of Q4. Meanwhile, growth in the manufacturing industry (6.5% y/y in September, up from 3.8% y/y in August) was mainly driven by the production of basic metals (including gold), which increased 3.3 times y/y from January to September (2.2 times y/y in September). The acceleration in the services sector was driven by financial activity (7.4% y/y in September), entertainment and recreation (29.8% y/y in September), and accommodation and food services (14.7% y/y in September). Sustained high growth rates in construction (15.9% y/y from January to October) were supported by mortgage lending (28.5% y/y in October).
At the same time, as noted by the EDB, domestic demand is actively expanding due to stable growth in lending to the population (22.9% y/y in October) and the execution of planned government spending in the fourth quarter of 2024.
According to the results for January-September, household consumption grew by 7.4% y/y, and investment in fixed assets increased by 13.6% y/y, serving as the main drivers of the economy during the same period (GDP growth was 6.0% y/y in January-September 2024).
Figures and Forecasts for the Armenian Economy
Economic growth in Armenia is projected at 7% in the state budget for 2024. The Central Bank of Armenia expects the country’s economic growth in 2024 to range between 6.5% and 5.8%. The Armenian government has revised its economic growth forecast in the draft state budget for 2025, lowering it from 5.6% to 5.1%.
The World Bank expects Armenia's economy to grow by 5.5% in 2024 and 5% in 2025. The IMF forecasts 6% growth for the Armenian economy in 2024 and 4.9% in 2025. The EBRD predicts 6.2% economic growth in Armenia in 2024 and 4.8% in 2025. The ADB forecasts 5.7% for 2024 and 6% for 2025. According to Fitch Ratings, Armenia's economic growth will be 6% in 2024 and 4.9% in 2025. S&P expects 6.2% growth for Armenia in 2024, and the UN projects Armenia’s economy will grow by 5.2% in 2024 and 4.8% in 2025.
