Armenia's economy gets negative forecast by EBRD
By Mushvig Mehdiyev
Deteriorating economy of Armenia has got its assessment from the European Bank for Reconstruction and Development - the bank revised downward its forecast for the country's economic development.
Regional Economic Prospects in EBRD Countries of Operations: May 2015 report released by the European bank forecasted a 1.5 percent fall in Armenia's GDP in 2015.
The EBRD put the decrease in remittances and exports as the major reasons behind the recession started in Armenia's economy earlier this year, saying "the real GDP growth in Armenia will be negative".
"International reserves of Armenia dropped by 25 percent in March compared to the same period last year. Tax and budget policy is limited due to high rate of correlation between the state debt and GDP," the report read.
Analysts at the EBRD believe that the expected restoration of Armenia's economy in 2016 will depend mostly on external factors, on Russia's economy in the main, according to EBRD.
Meanwhile, decline in Russia's GDP in 2015 will be 4.5 percent, and this negative trend in the country's economy has larger-than-expected effect on development prospects in the Eastern Europe, Caucasian and Central Asian countries.
The strongest impact of Russian recessions is seen on the volume of money transfers sent by labor migrants which is on a speedy fall now.
Armenia's state budget envisaged the GDP growth to reach around 4.1 percent alongside the 5.5 percent inflation rate in Armenia.
Positive expectations of the EBRD in view of Armenia's economic growth could reportedly come in 2016 with a 1 percent possible increase.
In its previous outlook, published in January, EBRD said Armenia’s economy would stagnate this year due to the depreciation of the Russian ruble that increased pressures on the currencies of economies with strong trade, investment and remittances ties to Russia.
Assessing the economies in neighboring countries of Armenia, the EBRD forecasted growth in Georgia to decelerate to 2.3 percent this year from a forecast of 4.2 percent in January. Azerbaijan and Kazakhstan will see their economies to grow by 1.5 percent in 2015. Kyrgyzstan’s economy will up by 3percent, according to the bank.
- - -
Follow Mushvig Mehdiyev on Twitter: @Mushviggo
Follow us on Twitter: @Azernews