Central Bank: Middle East conflict may raise inflation

PanARMENIAN.Net - Escalation of the conflict in the Middle East could cause inflation in Armenia to rise by 1.2–1.7%, said Martin Galstyan, governor of the Central Bank of Armenia.

According to him, the possible impact could be driven by several factors, including potential increases in oil prices, the need to use alternative import routes, and the replacement of food imports from Iran, Panorama.am reports.

Galstyan stressed that these remain risk scenarios, meaning the projected inflation would materialize only if those risks actually occur.

“The conflict in the Middle East increases the risks of stagflation and economic slowdown, as well as inflationary pressures in the economy,” the Central Bank chief said.

He added that a slowdown in global economic activity would inevitably affect Armenia as well.

Speaking about possible psychological effects of the conflict, Galstyan noted that some people who planned to visit Armenia might change their decision due to developments in the region.

He also said the situation could create obstacles for Armenia’s exports and for cargo transportation through logistics routes using the UAE hub.

“Iran-related developments resemble a Syrian scenario. If that were to materialize, it could have a very negative impact on us, but at this moment there is no such materialization,” Galstyan said.

He added that if such risks emerge, authorities will take appropriate measures to mitigate potential negative consequences.

On February 28, Israel and the United States carried out airstrikes against Iran, during which Iran’s Supreme Leader Ayatollah Ali Khamenei was killed. Iran subsequently launched retaliatory strikes against Israel and Persian Gulf countries hosting U.S. military bases.