IMF revises upward its outlook for Armenia’s growth in 2015
The International Monetary Fund (IMF) has revised upward its previous forecast of economic growth in Armenia for 2015, Mark Horton, IMF Mission Chief to Armenia, told reporters on Friday.
Mr. Horton said according to an earlier IMF forecast, the economic growth in Armenia in 2015 was to be 1%, but given the GDP growth in the first half and the ongoing trends IMF believes that Armenia will close the year with a 2.5% growth.
He said the growth in the first six months was driven by several factors that are unlikely to repeat in 2016- namely, the commissioning of a new copper mine and a very favorable year for agriculture.
Mr. Horton said the IMF projection is based on GDP growth that accelerated to 4.1% in the first half of 2015 from 2.6% in the same period in 2014. He also said IMF expects the economic growth in 2016 to be 2.2%, a little lower than in 2015.
The IMF Mission Chief to Armenia said the economic slowdown in 2016 will result from high interest rates on loans, lower levels of lending and reduction in the profitability of Armenian banks.
According to him, this suggests the need for aggressive changes in the market, diversification of industries and trade areas. He also singled out Armenia’s efforts to activate trade contacts with the Middle East and China.
At the same time, Mr. Horton pointed out a ‘mysterious’ phenomena, namely high economic growth in the first half and a fairly low level of tax collection, but added this may be conditioned by growth in sectors, which are tax-free or enjoy preferential tax terms – agriculture and services. At the same time, the government can increase tax collection rate through VAT payments by the Eurasian Economic Union, which are paid within 50 days after the import of goods.
The Armenian government’s projection of 2015 GDP growth is 4.1%. The Asian Development Bank (ADB) has downgraded the outlook for growth of Armenia's GDP in 2015 from 1.6% to 1.2%. The World Bank and the Eurasian Development Bank expect it to grow by 0.8%, the EBRD predicts stagnation. In its latest review the Central Bank of Armenia has improved its forecast to 2.1%-2.5%. -0-