“GDP growth is projected to recover partially in 2021 (to 3.4 percent) and more strongly in 2022 (4.3 percent). The recovery will be slow; the economy is unlikely to return to pre-COVID output levels until 2023,” the bank said in its latest Economic Update for Europe and Central Asia released late on Tuesday.
“Private consumption and the services sector are expected to recover gradually. Private investment will likely remain subdued, reflecting weak investor confidence,” added the report.
The Armenian government has forecast a similar growth rate for 2021. However, the country’s Central Bank said on March 17 that the domestic economy will likely expand by only 1.4 percent.
Data from the government’s Statistical Committee shows that GDP continued to shrink in January and February 2021.
The World Bank cautioned that its growth projections are a “baseline scenario” which assumes that Armenia will avoid coronavirus-related lockdowns and further political upheavals.
“The risks to the outlook are weighted heavily to the downside,” it said, adding that they include a “slow pace of immunization” of the population and “elevated political uncertainty.”
“Although the pace of vaccinations will gradually ramp up, the authorities do not expect to vaccinate a significant share of the population until 2022,” read the report.
The bank also noted the pandemic’s “severe” impact on low-income Armenians, saying that poverty in the country increased considerably in 2020. “The unemployment rate rose by 1 percentage point year on year, reaching 18.1 percent at end-September 2020,” it said.