Republic of Armenia. Recent social and economic trends and short-term prospective. April 2019

04 July 2019

Armenia's economic growth slowed to 6.8% in the first half of 2019 as a result of a reduction in investment activity in the mining sector and a slowdown in the state capital expenditures. The driver of economic growth was consumer demand side, supported by an increase in consumer lending, as well as the growth of domestic income and income coming from abroad in the form of remittances. Annual inflation reached the lower limit of 2.5% of the target bound of the Central Bank of Armenia, but core inflation remained low under the influence of weak growth in the money supply. Maintaining high rates of economic growth and public control on expenditure growth led to a surplus execution of the state budget. Despite a slowdown in external demand and supply constraints on some major export items, favorable terms of trade have helped to reduce the current account deficit. For 2019, the EFSD forecast of economic growth was revised upwards from 4.4% to 5.4% due to changes in the dynamics of foreign trade, in particular, a decrease in the volume of investment imports.