14 July 2017

Armenia's economy is picking up: IMF

On June 23, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation* with Armenia, noting that growth has been satisfactory with inflation under control, the fiscal situation broadly well managed, and foreign exchange reserves enhanced. 

In 2016, the IMF notes that GDP growth was at 0.2%, deflationary pressures persisted, and the fiscal deficit rose to 5.6% of GDP. Economic activity in 2017 has shown signs of recovery, accompanied by a pickup in inflation and private sector credit growth, supported by monetary policy easing.

Real GDP is projected to grow by around 3% in 2017, while inflation is estimated at 2% by end-2017. The risks are that a recent recovery in remittances and copper prices may not endure, and growth in key trading partners could be weaker than expected, the IMF said.
Executive Directors agreed** with the thrust of the staff appraisal, commending the Armenian authorities for their sustained efforts to enhance macroeconomic stability and satisfactory programme implementation despite significant external challenges. Directors noted that the economy is expected to gradually recover in 2017, but significant risks and challenges remain, including those from a narrow growth base and a sharp increase in public debt. They called for continued commitment to sound policies and structural reforms to ensure macroeconomic stability, and foster sustainable inclusive growth.

Directors called for continued efforts to advance structural reforms to foster sustainable and inclusive growth. They underscored the need to promote private sector development and diversify the economy by attracting FDI. In this context, they welcomed the authorities’ growth-promoting initiatives to improve the business environment, encourage competition, and strengthen governance.

It is expected that the next Article IV consultation with Armenia will be held on the standard 12-month cycle.

*Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

**At the conclusion of the discussion, the MD, as Chairman of the Board, summarises the views of Executive Directors, and this summary is transmitted to the country's authorities. Read an explanation of any qualifiers used in the summings-up