Armenia Economic Outlook

January 8, 2019

Reformist Prime Minister Nikol Pashinyan won a resounding mandate in the 9 December snap parliamentary election, with his My Step Alliance clinching 70% of the vote. The result should allow Pashinyan to move ahead with reforms, which had previously been gridlocked by the legislature. Pashinyan has stated that one of the first tasks of the new government will be to update the tax code, which could improve the business climate and attract foreign investment. On the economic front, incoming data for Q4 2018 point to mixed dynamics. Agricultural output continued to drop in November, but economic activity was propped up by surging growth in the services sector.

Armenia Economic Growth

Solid remittances inflows and a recovery in agricultural output should support economic activity this year. Upside risks to Armenia’s outlook stem from higher than expected FDI inflows if the government’s reform efforts are successful. FocusEconomics panelists project the economy will grow 5.0% in 2019, up 0.2 percentage points from last month’s forecast, and 4.7% in 2020.

Armenia Economy Data

	2013	2014	2015	2016	2017
Population (million)	3.0	3.0	3.0	3.0	3.0
GDP per capita (USD)	3,720	3,966	3,574	3,569	3,862
GDP (USD bn)	11.1	11.8	10.7	10.7	11.6
Economic Growth (GDP, annual variation in %)	3.3	3.6	3.2	0.2	7.5
Consumption (annual variation in %)	0.9	1.0	-7.8	-1.1	8.8
Investment (annual variation in %)	-7.0	-2.2	2.5	-11.4	7.7
Industrial Production (annual variation in %)	7.3	2.6	5.1	6.8	12.6
Unemployment Rate	16.2	17.8	19.5	17.1	18.0
Fiscal Balance (% of GDP)	-1.5	-1.9	-4.8	-5.4	-4.8
Public Debt (% of GDP)	40.8	43.7	48.7	56.7	58.7
Money (annual variation of M2 in %)	14.9	-3.5	5.2	24.8	28.9
Inflation Rate (CPI, annual variation in %)	5.8	3.0	3.7	-1.4	1.0
Policy Interest Rate (%)	7.75	8.50	8.75	6.25	6.00
Exchange Rate (vs USD)	405.3	463.5	482.9	482.8	483.2
Exchange Rate (vs USD, aop)	409.6	415.9	477.9	480.5	482.7
Current Account (% of GDP)	-7.3	-7.5	-2.5	-2.2	-3.5
Current Account Balance (USD bn)	-0.8	-0.9	-0.3	-0.2	-0.4
Trade Balance (USD billion)	-2.2	-2.1	-1.2	-0.9	-1.5
Exports (USD billion)	1.6	1.7	1.6	1.9	2.4
Imports (USD billion)	3.8	3.8	2.8	2.8	3.9
Exports (annual variation in %)	7.9	3.8	-4.4	16.4	25.8
Imports (annual variation in %)	5.6	-2.0	-25.1	0.9	36.2
International Reserves (EUR)	1.6	1.2	1.6	2.1	1.9
External Debt (% of GDP)	78.8	72.1	83.5	93.2	91.1

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Armenia Facts

	Value	Change	Date
Stock Market	0.5	0.0 %	Jan 16

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