Economic Year 2016 According to the Central Bank of Armenia
Central Bank of Armenia (CBA) released Inflation Reports and Monetary Policy Program for the first quarter of 2016. Besides the analysis of economic picture for 2015, CBA specialists make anticipations in the report on economic perspectives.
According to CBA, risks linked to world economy developments, as compared to former anticipations, have mainly been maintained.
Positive risks for low prices of raw materials and food products are still actual, which will contribute to rise of world demand.
This is first and foremost conditioned by sharp slowdown of China’s economy, risks of which have been maintained as well. This may lead to world demand and more reduction, which, in its turn, may generate risks of international prices for decrease of raw material and food products. Exactly for this reason CBA revised anticipations on industry as falling, mainly conditioned by expected low levels of international prices for mining products. Note, that pursuant RA National Statistical Service (NSS) report, industry recorded 15.7% growth in January (as compared to January 2015), which has risen optimistic moods. However, CBA anticipates 1.3-2.1% growth for 2016 in the field of industry, stressing that it’s too low from the recorded post-crisis average growth. “Slow growth of the field will be conditioned by limitations of additional growth opportunities, as a result of high level of saturation, developed throughout 2015, reduction of prices for mining metals, as well as maintenance of unfavorable conditions of export from the field of manufacturing to Russian markets,” the documents reads.
The field of construction, which recorded 5.1% growth, doesn’t inspire optimism to CBA. It’s stated in the document, that under maintaining low activity of investment in non-export economy sector, as well as decrease of money transfers from Russia, reduction of construction volumes on account of enterprises and population are anticipated. Variation of added value of construction for 2016 is anticipated from 0.8 to 0.2%.
Anticipations in the field of service for 2016 didn’t record considerable change (1.8-2.4%), which is lower than average growth recorded in recent years. In this field CBA anticipated slow temps for 2016, conditioned by weak level of internal demand, as a result of which again reduction of trade volumes is expected, as compared to 2015.
Little optimism may be noticed in the field of agriculture. Anticipations of added value, as compared to former ones, have been clarified toward the direction of growth. Growth of stock-rising comparatively higher than anticipations, as well as increase of export potential, observed in the field, serve as a basis for this. As a result, real growth of added value of the branch for 2016 will comprise 4.2-5.0%.
Risks form external world, and especially from Russia, according to Central Bank, will be maintained. True, instead of 4% growth for 2015, decline of Russia’s economy in 2016 will be 1.8%, however, big shifts aren’t expected at large. According to CBA specialists, conditioned by new anticipations of Russia’s economy and depreciation of ruble, throughout the year comparatively noticeable decline (9.0-12.0%) of physical persons’ monetary transfers to a dollar value is expected, as compared to previous year’s estimation, which will reflect on maintenance of low level of internal demand, accordingly, to reduction of private consumption. Internal demand, pursuant CBA will go down by 1.6%.
Anticipations of Central Bank on foreign trade turnover are as follows: real growth of export of goods and services is anticipated within 2.0 – 4.0%, due to moderate growth expecting in the branches of industry and agriculture. Real import of goods and services will go down by 6.0 – 8.0% in 2016, conditioned by weak demand.
On account of anticipated weak recovery of economies of Armenia’s neighboring countries, low level of prices for mining products in 2016, as well as high level of saturation in mining industry, which has developed in 2015, CBA estimates economic growth by 1.5-2.6%. Note, that on the basis of state budget for 2016 lays 2.2% economic growth. i.e. CBA assessment is in line with anticipations by the government, as compared to 2015, when the latter anticipated 4.1% growth, and CBA—0.6-2%.
In mid-term perspective Central Bank is more optimistic. Gradual recovery of internal demand in Armenia’s economy, productive implementation of the Government program directed to boosting export and investments, progressing improvement of external economic environment and structural amendments are the factors, by impact of which economic growth will intensify from 2017 and will comprise 3.0-4.5% in the end of anticipated horizon.
Long-term equilibrium level of Armenia’s economy is anticipated 4-5%. Moreover, CBA especially states that estimated long-term temp of GDP may decrease, if structural improvements develop slowly and investments in export sector of economy won’t record essential growth.
By Babken Tunyan
