Armenia Economic Outlook
Economic growth fell to 12.1% in Q1 from Q4’s 12.7% due to weaker growth in private spending and exports. On the flip side, growth in household consumption accelerated. In Q2, momentum likely remains upbeat: The economic activity index in April matched Q1’s growth figure as stronger trade and construction output offset a contraction in industrial production. In other news, Armenia and Azerbaijan have made significant recent progress on peace talks. Throughout May, authorities held meetings with U.S. Secretary of State Blinken, European Council President Michel and Russian President Putin. Following the talks, Armenian Prime Minister Pashinyan recognized Nagorno-Karabakh as part of Azerbaijan. These developments bode well for securing a lasting peace agreement and, consequently, for stability and trade in the country.
Inflation dropped to 3.2% in April from 5.4% in March, marking a 25-month low. The decline was spearheaded by softer price pressures for food and housing and utilities. Meanwhile, the Central Bank decided to hold rates at 10.75% at its 2 May meeting. Going forward, the Bank is seen easing its rates in 2023 amid softer inflation.