The World Bank projects a 3.7 percent GDP growth in Armenia in 2017. The figure is expected to reach 3.8 and 4.0 percent in 2018 and 2019 respectively.
The World Bank said in its latest Regional Economic Update, Migration and Mobility in Europe and Central Asia that “growth and poverty reduction prospects over the medium term remain positive in Armenia, but are subject to significant uncertainty, as risks on external and domestic political fronts remain high.”
“The upcoming presidential elections in April 2018 to be followed by government reshuffling, the modest recovery in Russia which is subject to downside risks from recent sanctions and the unclear situation with Iran justify a cautious forecast of 3.7 percent growth in 2017 and below 4 percent in 2018-19,” the World Bank said.
“Under these circumstances, the poverty rate would decline further to 11.0 percent in 2019. The most recent growth episode shows strong growth in the industry and service sectors, but only minor improvements in agricultural output, and continued decline of construction. These growth trends reflect a rebalancing of the structure of the economy, which may widen disparities between the capital city, secondary towns, and rural areas if labor mobility remains low.” The report said.
“Despite improved tax collections and contained public spending in the first half of 2017, fiscal tensions remain high, as public infrastructure suffered from drastic spending cuts in 2009, from which they have yet to recover. Striking the right balance to maintain the adequate levels of high-quality capital spending while complying with its fiscal targets will be critical going forward. The outlook also remains vulnerable to persistent regional risks stemming from unresolved territorial disputes and geopolitical tensions,” the World Bank said.