YEREVAN, September 23, /ARKA/. The average annual inflation in Armenia jumped to 8.3% in January– July 2022 from 6.1% a year earlier, reflecting increases of 13.1% for food, 6.4% for other goods, and 3.9% for services, the Asian Development Bank said in its September update of the Asian Development Outlook report.

According to the report, inflation in Armenia in 2022 will be at 8.5% and fall to 7.2% in 2023

‘Buoyant domestic demand, rising global commodity prices, and the pass-through effect of higher electricity tariffs from February 2022 and natural gas price hikes from April 2022 all propelled the acceleration. Inflation was 9.3% year on year in July, well above the Central Bank of Armenia’s 2.5%–5.5% target range,’ says the report.

To counter inflationary pressure, the central bank tightened monetary policy, raising the policy rate by 175 basis points in three steps to 9.5% in June 2022. With monetary tightening, an expected small moderation in aggregate demand, and strong appreciation of the Armenian dram against the US dollar and euro, this Update slightly reduces the inflation projections for 2022 and 2023.

The current account deficit widened considerably to equal 9.3% of GDP in the first quarter of 2022 from 2.8% a year earlier as a larger trade deficit more than offset surpluses in services and private transfers.

The merchandise trade deficit widened to 14.1% of GDP from 9.3% a year earlier as a 44.3% increase in imports outpaced a 27.8% increase in exports.

With imports expected to continue rising more quickly than exports, a further widening of the merchandise trade deficit is expected in the rest of the year.

Higher transfers and increased gains from tourism, transportation, and information and communication technologies are expected to offset part of the larger trade deficit in goods. Accordingly, this Update revises upward current account deficit projections for 2022 and 2023. -0-