Eurasian Development Bank cuts Armenia's 2024 GDP growth forecast from 7.5% to 6%

YEREVAN. Dec 5 (Interfax) - The Eurasian Development Bank (EDB) has cut Armenia's GDP growth forecast for 2024, lowering it from 7.5% predicted in its June forecast to 6%.

"The forecast has been revised based on updated GDP data for the first quarter of 2024 and the reduction in the contribution from the processing and export of precious metals to the formation of added value," the EDB said in its macroeconomic forecast for 2025-2027.

While Armenia's economic growth rate slowed during 2024, it still remained high, it said.

"The figure for economic activity increased 8.1% in January-October. The main contribution to economic growth over ten months of this year came from trade (18.8%), services (5.8%) and industry (11.7%). At the same time, industrial dynamics have weakened since the end of the second quarter due to a slowdown in the growth of manufacturing industries. While in the first quarter they accounted for almost 40% of economic activity, from June to October their contribution was small (on average 0.8 percentage points, or around 11% of economic activity). The slowdown in industry was largely offset by an acceleration in the services sector during the summer months and at the beginning of the fourth quarter. The growth in manufacturing (6.5% year-on-year in September after 3.8% YoY in August) was mainly driven by the production of basic metals, including gold, which increased 3.3-fold YoY from January to September (2.2-fold YoY in September)," the EDB's forecast said.

Inflation remains below the target range of the Central Bank of Armenia, which is 4% plus or minus 1.5 percentage points. The EDB forecasts consumer price growth of 1.8% for 2024.

The EDB expects Armenia's GDP to grow 5.5% in 2025, an increase from 4.2% in the June forecast, with inflation accelerating to 3.1% due to the recovery of global food prices, a decrease in the refinancing rate, and a moderate depreciation of the Armenian dram.

In 2026 and 2027, economic growth is expected to be 5.3% and 5%, respectively, with inflation at 3% and 2.5%, the EDB said.

The Armenian state budget for 2024 provides for 7% GDP growth, and economic growth is projected to be 5.1% in 2025.