The need for implementing countercyclical fiscal policy in light of Armenia's high GDP growth rates and excess demand in the economy is emphasized in the Central Bank's published report on monetary policy released on March 12.
Analyzing the budget for 2024 and the medium-term expenditure plan for 2024-2026, experts assess the impact of fiscal policy on aggregate demand in the medium term as neutral. It is expected that this will be driven by the anticipated growth in current and capital expenditures, as well as an increase in the tax-to-GDP ratio due to the ongoing process of tax administration improvement.
However, short-term risks of reallocating current budget expenditures are highlighted, which could stimulate domestic consumption. Moreover, any underperformance in capital spending poses a risk to potential economic growth in the medium term, underscored by the Central Bank.
Earlier, BMG reported, that according to preliminary data, Armenia's economy demonstrated significant growth at 8.7% in 2023. Additionally, in January of the current year, economic activity increased by 10.7% compared to the same period last year.
Armenia's economic growth in the 2024 state budget is projected at 7%, with inflation set at 4% (±1.5%).
