YEREVAN, September 16. /ARKA/. The Asian Development Bank (ADB) has revised its outlook for Armenia’s economy to a 4% decline from the minus 3.5% projected previously, in April, the bank’s press service reported on Tuesday.
The bank economic analysts say in the Asian Development Outlook 2020 that Armenia’s GDP is still expected to bounce back with 3.5 per cent growth in 2021 as the country begins to recover from the economic shock caused by the COVID-19 pandemic.
They say Armenia’s 7% economic growth stopped one year ago because of the coronavirus – it shrank 5.7% in the first half of this year.
The economic analysts also changed their inflation outlook for Armenia from the 2.8% they predicted in April to 1.4% because of the sluggish domestic and outside demand, low oil prices and quite stable exchange rate.
“The full impact of the COVID-19 pandemic on the Armenian economy is yet to be fully assessed, but global disruption from COVID-19 is expected for the rest of 2020, further weakening trade, remittances, and tourism,” said ADB Country Director for Armenia Paolo Spantigati.
According to the ADB report, emerging Asian economies will contract this year for the first time in nearly six decades, but recovery will resume next year as the region begins to weather the collapse caused by the coronavirus pandemic.
ADB analysts predict that in this developing Asia, the decline will be minus 0.7% of GDP, which will be the first negative indicator since the early 1960s. Growth will be 6.8% in 2021, in part because growth will be compared to the weak 2020. It is expected that about 2/3 of the region’s economies in 2020 will show negative growth.
“Most economies in the Asia and Pacific region can expect difficult growth path for the rest of 2020,” said Yasuyuki Sawada, ADB chief economist. “The economic threat posed by the Covid-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures,” Sawada said. In his words, downturns across developing Asia are more widespread than previous crises, with three-quarters of economies in the region tipped to shrink this year.
The protracted COVID-19 pandemic remains the biggest risk of deteriorating growth prospects this year and next. To mitigate the risk, governments in the region have adopted broad-based responses, including $ 3.6 trillion in political support packages, which are equivalent to about 15% of regional GDP.
Inflation forecasts for developing Asia were revised down from 3.2% in April to 2.9% due to persisting low oil prices and weak demand. Inflation is expected to fall to 2.3% in 2021.
ADB was founded in 1966. Its main task is to stimulate economic growth in Asia and the Far East, providing direct loans and technical assistance to these regions. ADB has been cooperating with the Armenian government since 2005. The total package of the ADB – implemented programs in the country as of October 2019 exceeds $ 1.5 billion.
According to the National Statistical Committee, the indicator of economic activity in Armenia increased 9.7% in July 2020, compared to July 2019. A 5.7% year-on-year decline in economic activity registered in Jan-July 2020.
The Central Bank of Armenia on September 15 revised its GDP forecast downward. According to the new estimates of the regulator, the economic decline in Armenia by the end of 2020 will stand at 6.2%, instead of the previously predicted decline within 4%.
On April 29, 2020, the National Assembly of Armenia approved the revision of budget indicators because of COVID-19. Taking into account the unfavorable impact of the situation with the coronavirus, the budget forecast for GDP was lowered to a decline of 2% (earlier, a 4.9% growth was projected for the current year), and the deficit was increased to 340 billion drams, or 5% of GDP ( previously 2.3%). -0–
