YEREVAN, July 12. /ARKA/. The Armenian government has approved today a Medium Term Expenditure Framework and a plan of measures designed to cut the government’s debt in 2022-2026, the press service of the government reported.
According to the government, the Armenian economy, as well as all the economies of the world, suffered heavy losses in 2020 because of the COVID-19 pandemic. The economy of Armenia suffered also losses due to the war in the Nagorno-Karabakh conflict zone.
According to the Medium Term Expenditure Framework, the Armenian government’s aim is to ensure an average annual economic growth of 7% in 2022-2026. To ensure 7% growth it is necessary to constantly increase the potential of the economy, which, in turn, will increase the growth potential.
To ensure the growth, it is necessary to pursue an effective investment policy, channeling investments into the export sectors of the economy, in technologies and infrastructure.
In this context, to ensure 7% medium-term annual growth, investments in fixed assets need to grow 12.5% on average annually (additionally, on average, about 270 billion drams per year), which will increase the share of fixed assets in GDP by 5.4 pp in 2026 compared to 2019.
An important prerequisite for ensuring high economic growth is an increase in the labor and capital productivity, which can be realized through the use of new technological solutions, an improvement in the business and investment environment, an improvement in the quality of the labor force and implementation of educational activities.
This requires an increase in overall factor productivity by an average of 5.3%. Exports are also one of the possible factors in achieving the goal: higher investment growth will be followed by a higher growth in the export of goods and services.
Armenia’s acting Prime Minister Nikol Pashinyan said on July 1 that the economic growth projection for 2021 was revised upward from the previously forecast of 3.2% to 6 %.
On June 15, Armenia’s Central Bank chairman Martin Galatians said the regulator had again revised upward its economic growth forecast for 2021 to 4.6%. According to him, the upward revision was prompted by the growth in the services sector, which the bank believes will grow by 6.2% this year, up from its earlier forecast of 1.2%.
Also, the industrial output is expected to grow by 4%, up from the earlier forecast of 0.4%. The growth is driven mainly by increased prices for commodities, as well Armenia’s government’s GDP growth projection for 2021 is 3.2%, while inflation is expected to be 4% (± 1.5%).
The World Bank forecasts for 3.4% growth for 2021, 4.3% for 2022 and 5.3% for 2023. The IMF expects 1% growth in 2021.
According to S&P Global Ratings, Armenia’s real GDP growth will be 2.5% in 2021 and 4.5% in 2022-2023. -0-.