Armenia’s economy is expected to grow by 4% in 2021 and 5% in 2022, according to the forecast of the European Bank for Reconstruction and Development (EBRD) released on Tuesday.

The Armenian economy has embarked on a broadbased recovery. The economy contracted by 7.4 per cent in 2020 as household consumption, investments and exports plummeted. A strong import contraction outweighed the steep decline in export revenues, while macroeconomic stability was supported by maintained access to external financing, including under the augmented IMF programme,” EBRD said.

“A ten-year Eurobond in the amount of US$ 750 million, issued in January 2021, helped to refinance the existing Eurobond and boosted international reserves to an all-time high of US$ 3.2 billion in February. Inflation picked up to 5.9 per cent year-on-year in May 2021 on the back of higher international food prices and dram depreciation, following seven years of below-target inflation. This prompted the central bank to increase the refinancing rate three consecutive times from 4.25 per cent in September 2020 to 6 per cent in May 2021, the first rate rises since early 2015,” the report reads.

According to EBRD, high frequency indicators of economic activity point to strong growth in April 2021, offsetting negative or slow growth in the first three months of the year and reaching 2.6 per cent year-on-year growth overall for
the period January to April. “Growth is broad-based as almost all sectors posted positive developments, in particular the construction sector. The Armenian economy is projected to grow by 4.0 per cent in 2021 and by 5.0 per cent in 2022. Economic recovery depends on the speed of vaccinations, political stability and prompt continuation of structural reforms after the elections.”

The Bank predicts a growth of 4.2 per cent in 2021 for the emerging economies in eastern Europe, Central Asia and northern Africa.

In eastern Europe and the Caucasus, economies are expected to grow by 2.8 per cent in 2021 and 3 per cent in 2022 as lockdowns are lifted and demand for exports remains strong. Higher commodity prices support the recovery in commodity exporting economies.