Armenia Economic Outlook
GDP grew 9.1% year on year in Q2, slowing from Q1’s 12.1% expansion. A marked cooling in the industrial sector and weaker activity in the financial, mining and agricultural sectors drove the slowdown. More positively, activity in the construction, wholesale and retail trade, and transportation sectors was upbeat, keeping overall GDP growth elevated as easing inflation boosted domestic demand. Meanwhile, merchandise export growth slowed in Q2, pointing to a decline in re-exports to Russia, which dampened the external sector. In July, economic activity growth cooled further, pointing to a sustained moderation in Q3. In other news, in recent weeks, both Fitch Ratings and S&P Global Ratings upgraded Armenia’s credit rating to ‘BB-‘ from ‘B+’ with a stable outlook, citing strong economic growth prospects and an improvement in the public finances.
Armenia Inflation
Consumer prices ticked down 0.1% year on year in July after falling 0.5% in June. The softer decrease in prices was chiefly due to moderating declines in food and transport costs. Against this deflationary backdrop, Armenia’s Central Bank cut its key policy rate by 25 basis points to 10.25% on 1 August. Prices should return to inflationary territory by year-end.
This chart displays Economic Growth (GDP, annual variation in %) for Armenia from 2013 to 2022.