Economic growth in Armenia, which practically ground to a halt last year, will reach 2.7 percent in 2017 and accelerate further in the following years, the World Bank said in a regional report released on Thursday.
“Growth is projected to accelerate to 2.7 percent in 2017, reflecting the sustained expansion of the tradable sectors and a modest recovery in domestic consumption,” says the report. It forecasts growth rates of 3.1 percent and 3.4 percent for 2018 and 2019 respectively.
The International Monetary Fund similarly said last month that the Armenian economy should expand by around 3 percent this year not least because of improving conditions in Russia, Armenia’s main trading partner, as well as additional capital spending planned by the authorities.
The World Bank report cautions that the country’s growth outlook is susceptible to “negative impact external shocks” such a possible slower-than-expected recovery in Russia. It also says that recent parliamentary elections might lead to the kind of cabinet changes in Yerevan that would “adversely affect investor confidence” and “slow the pace of reform.”
The authors of the report further made clear that the growth rates anticipated by them will not sharply reduce poverty in Armenia in the coming days. “The poverty rate [measured by the World Bank] is projected to fall from 23.8 percent in 2017 to 22.2 percent in 2019,” they said.
Ending a two-week mission to Yerevan on April 12, a senior IMF official, Hossein Samiei, insisted that Prime Minister Karen Karapetian’s cabinet is committed to “decisive” reforms which he said are needed for achieving faster growth. He pointed to ongoing government efforts to improve the domestic business environment, tackle tax evasion and attract foreign investment.
“Currently, we estimate potential growth -- the maximum that Armenia at the moment can achieve -- at around 4 percent,” Samiei told a news conference. “However, in my view, Armenia has the potential to grow much faster -- 6 percent, 7 percent -- if the structural reforms … take place.”
Karapetian has repeatedly pledged to create “equal conditions” for all business since he was named prime minister in September. Armenian opposition politicians are skeptical about the premier’s ambitious reform agenda, however.