Domestic demand in Armenia expected to regain momentum in 2016 - regulator

03.06.2016 13:59
Domestic demand in Armenia expected to regain momentum in 2016 - regulator

YEREVAN, June 3. /ARKA/. Domestic demand in Armenia is expected to regain momentum in 2016, the Central Bank of Armenia forecasts in its report on its monetary policy for the second quarter 2016 and its first quarter performance.

“A gradual recovery of domestic demand is expected in 2016, but it will be lower than its balanced indicator so far,” the regulator says in its report.

According to the central bank’s forecast, the flow of money transfers from Russia, Armenia’s key trade partner, will continue dwindling in 2016, but the decline will be not so sharp as in 2015 and will stand at 6 to 8 percent.

The regulator says the adverse impact from the decline in remittances on domestic demand will be significantly mitigated by the expansionary monetary, tax and budgetary policy and a low deflation environment.

As a result, households’ spending will grow 1%.

According to the report, private consumption fell 8% in 2015.

“Recovery of the economies of Armenia’s trade partners and increase in volumes of exports will spur growth of households’ income, which will lead to recovery of demand in Armenia’s private sector,” the report says.

Private consumption will grow by 1.8-2.2% and 2.1 – 2.5% in 2017 and 2018 respectively.

On the other side, the central bank says that reduction of Russian money transfers to Armenia and maintenance of a weak investment environment in non-export segments of the economy will have adverse impacts also on volumes of private investments.

Along with that, the regulator expects increase in investment activity in the export segment of the economy thanks to agriculture and industrial growth and in the services sector, and as a result, the segment’s competitiveness will relatively grow.

Taking into account the mentioned above, the central bank forecasts a 2% growth of aggregate private investments.

Private investments will grow 5.0-5.5% in 2017 and 2018 respectively.

The central bank changed its economic growth outlook upward – to 2.7-3.6%. ---0----


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