Economic growth in Armenia will be faster than expected this year even if it falls short of the Armenian government’s revised projections, according to a report released by the International Monetary Fund on Tuesday.
The IMF’s latest World Economic Outlook predicts that the Armenian economy will grow by 3.5 percent after stagnating in 2016.
The fund forecast a growth rate of around 3 percent in June. It warned of downward risks at the time, saying that increased remittances from Armenians working abroad and prices of copper, the country’s number one export item, “may not endure.”
Most of those multimillion-dollar remittances come from migrant workers in Russia which fell into recession in 2015. Russia is also Armenia’s leading trading partner.
“After two years of recession, economic activity in Russia is projected to expand by 1.8 percent in 2017, helped by stabilizing oil prices, easing financial conditions, and improved confidence. Over the medium term, however, growth is expected to remain about 1.5 percent,” says the latest IMF report. This might explain why it expects economic growth in Armenia to slow to 2.9 percent in 2018.
The Armenian government had forecast a 3.2 percent growth rate for 2017 over a year ago. Official statistics showed the country’s Gross Domestic Product increasing by around 5 percent in the first half of this year on the back of a double-digit rise in industrial output.
Finance Minister Vartan Aramian said late last month that full-year growth will likely come in at 4.3 percent. In its draft state budget unveiled by Aramian last week, the government said that growth should accelerate to 4.5 percent in 2018.