Inflationary impact from external sector continues to be maintained on Armenia’s economy – CB

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YEREVAN, FEBRUARY 2, ARMENPRESS. 3.4% inflation has been registered in Armenia in December 2020 conditioned by the increase in prices of imported food products, and as a result the 12-month inflation has greatly increased and approached the targeted figure, comprising 3.7% by the end of the year, the Central Bank of Armenia told Armenpress, adding that in December the 12-month normal inflation has also increased, comprising 3.6% at the end of the month.

“Restoration of economic activity and demand are being observed among the main partners of Armenia – US and Russia, in 2021 in accordance with the scenario outlined by the Central Bank’s monetary-credit policy program. Meanwhile, slower rates are being recorded in the Eurozone connected with the coronavirus-related restrictions. At the same time, inflationary tendencies are being registered in the international markets of raw materials and food products, which is reflected with higher inflationary environment than expected in the partner countries. In such situation the CBA Board estimates that inflationary impact mainly continues to be maintained on the economy of Armenia from the external sector.

In the fourth quarter, under the establishment of the martial law in Armenia, the spread of COVID-19 and the great uncertainty over economic growth prospects, a low economic activity than expected has been registered. The economic decline was greatly connected with the decline in the field of services, reflecting also the maintenance of weak demand”, the CBA said, noting that in such situation it is important to carry out structural reforms to boost the potential level of the economy, including with the adoption of a respective expenditure strategy for the fiscal policy.

“Despite the weak demand and the inflation developments, there is a certain acceleration in inflationary expectations, as a result the CBA Board finds it appropriate to raise the refinancing rate”, it said.

Editing and Translating by Aneta Harutyunyan

 

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