Economy after the coronavirus: How have Armenia’s GDP forecasts changed?

The Central Bank of Armenia and a number of international organizations have changed their forecasts for the Armenian economy due to the outbreak of the new type of coronavirus. The impending economic crisis will lead to a sharp decline in GDP growth and even negative growth, inflation and negative changes in other economic indicators.

In an interview with 168․am on April 12, referring to the expected changes in the structure of the Armenian economy, economist Suren Parsyan, a member of the Bureau of the Armenian Revolutionary Federation (ARF) made a number of ambiguous statements, noting that there are some issues in the cooperation between the Central Bank and the government.

“For example, the 2020 state budget envisages 4.5% inflation, while the latest analysis of the Central Bank speaks of 1.9% inflation, which directly affects the government’s fiscal indicators” said Parsyan.

According to the economist, this in turn affects economic indicators. “For example, according to the Central Bank’s forecasts, we will have only 0.7% economic growth, when the government has planned 4.9% under the state budget program. The Central Bank is not interested in this either.”

The Fact Investigation Platform has studied the claims of economist Suren Parsyan and the real picture of the forecasts of Armenia’s economic indicators.

On economic growth indicators

Parsyan resorted to manipulation, comparing the forecasts of the Central Bank’s report published in April with the forecast stipulated in the state budget. In other words, in the budget forecasts adopted last year, it was not possible to take into account the possible impact of the coronavirus on the economy, while the last report of the Central Bank has been elaborated, taking into account the impact caused by the virus.

Thus, according to the Central Bank’s “Inflation Report” approved on March 31 of this year, Armenia’s GDP growth in 2020 is projected at 0.7%, compared to the actual 7.6% growth last year. According to the Central Bank, in 2021 the GDP growth rate will be in the range of 4.9%.

What are the forecasts of international organizations?

Given the impact of the coronavirus infection, international organizations have also updated their forecasts for the economies of the countries. At the start of the year the World Bank predicted 5.1% GDP growth for Armenia, while at the beginning of April the forecasts already became more modest, namely, 1.7%.

And Fitch Ratings announced on April 3 that it changes the forecasts for Armenia’s economy from positive to negative. According to the organization, the impact of the coronavirus on the economy will be such that instead of 7.6% economic growth in 2019, only 0.5% growth will be registered in 2020.

For 2021, Fitch Ratings forecasts 5.5% economic growth. The Asian Development Bank has relatively more positive forecasts – 2-2% growth. And the forecast of the Asian Development Bank for 2021 is 4.5%. For comparison, the Asian Development Bank forecasts 0% economic growth for neighboring Georgia in 2020, and the same as for Armenia in 2021.

Thus, Suren Parsyan’s claims that the difference between Armenia’s economic indicators is related to some problems between the Central Bank and the government are manipulative. Moreover, members of the government have repeatedly stated that the growth rate of the country’s economy will decrease.

Ani Avetisyan