YEREVAN, April 29. /ARKA/. The Central Bank of Armenia has decided to maintain the countercyclical capital buffer at 1.75%. This decision was made following an assessment of the macro-financial landscape and trends within the credit market.
In the latest quarter, there has been a notable uptick in the financial cycle index, attributed to increased lending activity across various sectors.
By the end of Q4 2024, the credit-to-GDP ratio rose by approximately 3.3 percentage points, reaching around 75.3%, nearly aligning with its long-term trend. The credit/GDP gap was recorded at about -0.1 percentage points, indicating a minor deviation from the long-term average. Moreover, the annualized growth rate of total credit has remained stable compared to the previous quarter.
During January and February of 2025, new mortgage originations roughly matched the levels seen in the same period last year.
In the same timeframe, compared to the conclusion of 2024, the real estate market witnessed a decline in both prices and rents, coupled with a notable slowdown in construction lending growth.
The end of the income tax refund program in Yerevan and the increasing saturation of demand in the real estate sector suggest a possible downturn in market activity.
On the other hand, consumer lending has continued to see growth. Key contributors to the high growth rates of consumer loans over the past two years include rising incomes within the economy and the urgent need for loans.
This growth may also be viewed as a correction following the previous years of declining or moderate growth in consumer lending. Additionally, there’s a noticeable demand for financing to acquire durable goods for new apartments, driven by the heightened activity in the real estate market.
However, credit risks stemming from geopolitical uncertainties and the fluctuations within the real estate market are significant concerns for financial stability at this time.”-0-
