World Bank expects Armenian economy to grow by 3.1% in 2021 after contracting 8% in 2020

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YEREVAN, January 6. /ARKA/. In its latest flagship Global Economic Prospects report, published on Tuesday, the World Bank predicted 3.1% growth for Armenia’s economy in 2021 and 4.5% growth in 2022 after contracting by 8% in Covid-19 inflicted 2020.

In its previous Global Economic Prospects report, released in 2020 June, the World Bank predicted a 5.2% decline for the Armenian economy in 2020 and 1.8% decline in 2021. In its October report on economic development of Europe and Central Asia the World Bank expected the Armenian economy to contract by 6.3% in 2020 and grow by 4.6% in 2021.

According to the latest Global Economic Prospects report, growth in the South Caucasus subregion is projected to rise to 2.5 percent in 2021, as the shocks related to the pandemic and conflict dissipate, and as tourism recovers alongside improving consumer and business confidence.

Activity is expected to expand in Azerbaijan over the forecast horizon as oil prices stabilize and the economy benefits from investment and reconstruction spending. The peace statement between Armenia and Azerbaijan is expected to help alleviate geopolitical tensions in the region.

In Central Asia, growth is expected to recover to 3 percent in 2021, supported by a modest rise in commodity prices and foreign direct investment as the subregion deepens its integration with China’s Belt and Road Initiative. Forecasts for a rebound, however, have been downgraded due to rising policy uncertainty in Central Asia, particularly in the Kyrgyz Republic.

Growth in Russia, the region’s largest economy, is envisioned to pick up only modestly in 2021, to 2.6%, as the country grapples with a renewed acceleration in COVID-19 infections. Growth is expected to be supported by the rollout of a vaccine, a rise industrial commodity prices, and continuation of supportive policy measures.

According to the report, the global economy is expected to expand 4% in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms.

The collapse in global economic activity in 2020 is estimated to have been slightly less severe than previously projected, mainly due to shallower contractions in advanced economies and a more robust recovery in China. In contrast, disruptions to activity in the majority of other emerging market and developing economies were more acute than expected.

The Armenian government’s initial growth projection for 2020 was 4.8%, but later it was revised downward to 6% and then to 7.9%. IMF predicts a 7.25% decline for Armenia’s GDP in 2020, and 1% growth in 2021.

The government’s growth forecast for 2021 is 3.2%, and the inflation projection is 4% (± 1.5%).

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