In its baseline scenario, the Eurasian Development Bank (EDB) forecasts Armenia's GDP growth at 7.5% in 2024. Inflation is expected to accelerate to 1.5% by the end of 2024, driven by strengthening domestic demand, moderate depreciation of the national currency, and continued reduction of the refinancing rate. This is stated in the EDB's macroeconomic forecast.
The EDB's baseline forecast for 2024 includes a stimulating influence of fiscal policy on the economy.
"At the beginning of 2024, the pace of Armenia's economic growth accelerated. In January-April, the economic activity indicator increased by 13.2% year-on-year. The main driver was the industrial sector (+26.8% y/y in January-April), contributing approximately 5.1 percentage points to growth. The contribution of key sectors to business activity was positive, although this dynamic was driven by growth concentration in certain industries. During this period, the growth in industry and trade (+26.7% y/y) was mainly due to a significant increase in the processing and external trade of gold jewelry, while the dynamics in services (+3.9% y/y) were driven by increased financial activity (+16.8% y/y). However, the output dynamics of most other service sectors and manufacturing remained weak," the forecast states.
The industrial growth continued to accelerate at the beginning of the year, attributed to the late 2023 surge in gold jewelry processing for export and its trade. However, the production volumes of other key industrial sectors slowed down after the high levels of 2022-2023.
"The 4.6-fold increase in gold jewelry production in January-April offset declines and slowdowns in other major industrial sectors. Construction growth (+13.7% y/y in January-April) remained robust amid high levels of mortgage lending (+23.3% y/y as of April). Overall household lending (+21.2% y/y in April), significant savings, and declining consumer prices in the country supported domestic demand," the report says.
In an exclusive interview with BMG, Armenian Finance Minister Vahe Hovhannisyan discussed the Ministry of Finance's forecasts for economic growth in Armenia in 2024. Hovhannisyan revealed that the Ministry has developed several growth scenarios. However, based on its current assessment, the Ministry expects a growth rate of around 7% in the near future.
The state budget of Armenia for 2024 projects an economic growth rate of 7% and an inflation rate of 4% (±1.5%).
