(Reuters) - Armenia’s economy will contract by 4 percent in 2020 due to the negative impact of the coronavirus pandemic, but is expected to recover and grow 5.5 percent next year, Martin Galstian, the country’s Central Bank head, said on Tuesday.
The Central Bank had previously forecast a contraction of 0.7 percent this year after growth of 7.6 percent in 2019. The worst-affected sectors of the economy are services and construction as well as international tourism, Galstian said while presenting the bank’s quarterly inflation report.
Inflation is expected to be around 1.9 percent in 2020. Armenia’s consumer price index declined 0.1 percent in May month-on-month, but rose 1.2 percent year-on-year.
In the report, the bank said the amount of private remittances would decline by 22-25 percent this year due to the drop in oil prices in Russia, Armenia’s main trade partner, and Moscow’s ban on migrant workers during the pandemic.
However, it said that would not have a significant impact on GDP.
The Central Bank cut its key refinancing rate to 4.5 percent from 5 percent last month, citing weakening external and internal demand as well as a slow pace of recovery.
The country of around 3 million people had reported 25,542 cases of the coronavirus as of Tuesday, and 443 deaths. It is the worst-affected country in the South Caucasus region.