Eurasian Development Bank lowers its forecast for economic growth in Armenia for 2014 from 4% to 3.3%

Eurasian Development Bank lowers its forecast for economic growth in Armenia for 2014 from 4% to 3.3%

YEREVAN, December 22. / ARKA /. The Eurasian Development Bank (EDB) has lowered its forecast of economic growth in Armenia for 2014 from 4% to 3.3%. According to an EDB  study, the downward revision of Armenia’s economic expansion forecast results from the weakening domestic demand, caused in part by the depreciation of the national currency, the dram, as well as from the negative impact of external factors, primarily the economic slowdown in Russia and a weak growth in Europe. 

The study reminds that in October 2014 Armenia’s economic activity grew only by 3.7% from the year earlier, while the nine-month grow was  4.2%.

"Armenia's economy appeared to be more sensitive to the economic slowdown in Russia and the increased geopolitical uncertainty. This resulted in declined investment activity, a cut in remittances sent home by Armenian labor migrants in Russia and weakening exports,"  the study says.

The study says also that in 2015 Armenia’s economic growth will develop under the influence of two opposing factors. On the one hand, a possible slowdown in the Russian economy will be having a negative impact, while on the other hand, Armenia’s membership in the Eurasian Economic Union (EEU)  is supposed to have a favorable impact on its exports of agricultural products to EEU member countries, especially in the context of ongoing Western sanctions against Russia.

The study says  that Armenia can also count on lower energy prices, partly because of their decrease in international markets, as well as on  potential increase in foreign investment. In general, according to the study, next year’s economic growth will not differ much from that in 2013 and 2014 and will fall to 3.8% from the previous projection of 4.2%.

The study also says that due to increased spending Armenia may close this year with a budget deficit (possibly lower than the planned 2.3% of GDP). However, the budget is tightly controlled by the government, partly thanks to the ongoing IMF program. The 2015 budget reconciled with IMF looks pretty conservative with moderate expansion of budget deficit to 2.34% of GDP  with  a very moderate pace of growth  in revenue and spending.

Eurasian Development Bank (EDB) is an international financial organization established by Russia and Kazakhstan in 2006 to help develop market economies and boost mutual trade ties in member states. The member-states are Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. -0--