Armenia’s GDP is on course to shrink by 1.5 percent this year as the global economy is entering a severe recession resulting from the coronavirus pandemic, the International Monetary Fund said on Tuesday.
In its latest World Economic Outlook, the IMF forecast the worst global economic crisis since the Great Depression of the 1930s. The world economy will contract by 3 percent before rebounding in 2021, it said.
The fund cautioned that this is a “baseline scenario” which assumes that the pandemic will fade in the second half of 2020. “The pandemic could prove more persistent than assumed in the baseline,” it said.
The Armenian economy grew by 7.6 percent last year and continued to expand robustly in the first two months of this year. However, the situation changed dramatically last month as the Armenian government put the country under lockdown to fight against coronavirus.
The IMF said that Armenia will fall into a recession in 2020 but should grow by 4.8 percent already next year. It predicted steeper GDP contractions in the two other South Caucasus states: Azerbaijan and Georgia.
The fund also expects that the Russian economy will shrink by 5.5 percent primarily due to the collapse of international oil prices. Russia is Armenia’s main trading partner, export market and source of multimillion-dollar remittances from migrant workers.
In a similar global report released on April 9, the World Bank said that the Armenian economy could still grow by 1.7 percent in 2020 despite the pandemic. But it warned that a prolonged health crisis would lead to “stagnant GDP or even an economic contraction.”
Prime Minister Nikol Pashinian admitted on April 10 that his country now stands “on the brink of a recession.” “It seems inevitable,” he said during a video conference with the prime ministers of Russia and three other ex-Soviet states making up the Russian-led Eurasian Economic Union.
Pashinian’s government approved late last month a wide-ranging stimulus package designed to cushion the economic impact of coronavirus. It includes cash payments to a large part of the population, financial assistance to businesses and loan subsidies for farmers.
On Sunday, the government decided to allow more types of business activity, notably construction and cement and cigarette manufacturing, despite the continuing spread of the disease which has already killed 16 Armenians.
The Armenian Ministry of Health said on Tuesday morning that 28 more people tested positive for coronavirus in the past day, raising to 1,067 the total of COVID-19 cases recorded in the country. Almost twice as many other people recovered from the disease in the same period, according to it.
The ministry reported similar daily numbers of new infections in the course of last week. The virus spread more rapidly in Armenia earlier in April and in late March.
Also, Armenian health authorities claim to have more than doubled the daily number of coronavirus tests in the last three days.
“I believe that right now we have a very serious chance to break the spine of the epidemic,” Pashinian said when he cited the latest official figures in a Facebook livestream.
The premier acknowledged that the government’s decision to reopen some sectors of the domestic economy could reverse “recent days’ positive dynamic.” He again urged the affected companies and their workers to follow social distancing rules and take other precautions.