The solid recovery of the economy in Armenia seen in 2021 carried strong growth momentum into 2022, with economic growth reaching 13.1 per cent in the period from January to July, the European Bank for Reconstruction and Development (EBRD) reports in its latest Regional Economic Prospects (REP) on Wednesday, September 28.
The arrival of many people and firms from Russia led to an increase of 113 per cent in foreign inflows and boosted demand for services.
This has helped Armenia to finance its widening trade deficit. Foreign reserves have also increased by 20 per cent and the exchange rate by 18 per cent. The report forecasts robust growth of 8 per cent in 2022, up from a previous estimate of 4.5 per cent. The slowdown is expected to be less gentle, with a drop to 4 per cent likely in 2023. However, the latest growth estimate for 2023 remains above the earlier projection of 2.5 per cent.
Overall, the EBRD predicts growth of 2.3 per cent in output across its regions in 2022. While this is an upward revision of 1.2 percentage points relative to its May forecast, the Bank warns of subdued growth in 2023, revising projected growth figures down by 1.7 percentage points to 3 per cent.
Projections are subject to further downside risks, should the war on Ukraine escalate.
The economies of Armenia, Azerbaijan and Georgia are enjoying some of their highest growth rates in years, the report said. Azerbaijan is capitalising on high levels of oil and gas revenues, as a result of elevated prices and increased export revenues, but also on the strong performance of its non-energy sector.
Meanwhile, Armenia and Georgia are benefiting from an inflow of Russian businesses and information and communication technology (ICT) professionals, boosting the service sectors of these small economies.