World Bank's Projections for Armenia's Economic Situation

According to new projections by the World Bank, Armenia's economy is expected to grow by 6.1% in 2021. The institution has published the "Economic Developments in the Europe and Central Asia (ECA) Region Report" (Fall 2021). Compared to the June report's predictions, which estimated a 3.4% economic growth for Armenia in 2021, this time the growth forecast has been raised by 2.7 percentage points.

The World Bank has taken into account current economic trends and concluded that developments are more positive than expected. It is noted that due to the two shocks of 2020—the pandemic and the conflict with Azerbaijan—Armenia's economy recorded a sharp decline but shows signs of recovery in 2021. According to World Bank specialists, Armenia's economy is expected to return to pre-COVID levels by mid-2022. However, significant risks for the economy include the slow pace of vaccinations, rising COVID-19 cases, and geopolitical uncertainty.

According to the latest publication by the Statistical Committee, Armenia's economic activity index increased by 4.9% during January-August 2021 compared to the same period in 2020. For the following year, 2022, the World Bank forecasts a 4.8% economic growth, and 5.4% in 2023. It is worth noting that in 2020, Armenia recorded a 7.4% economic decline.

The graphic shows the actual growth figures for the countries listed during 2018-2020, while forecasts are provided for 2021-2023. According to these projections, Georgia is expected to grow by 8% in 2021, Turkey by 8.5%, and Azerbaijan by 5%. Among the EAEU countries, Russia is projected to grow by 4.3%, Belarus by 1.2%, Kazakhstan by 3.5%, and Kyrgyzstan by 2.3%.

The report mentions that internal demand has increased in Armenia. The growth in exports, which was influenced by the rise in metal prices on global markets, has also positively impacted economic growth. Meanwhile, inflation in goods and services has had a negative effect on consumption and the economy in general, with food prices noticeably increasing.

It is emphasized that although the tourism sector in the South Caucasus has somewhat stabilized, in Armenia and Georgia, the influx of tourists has not yet reached pre-pandemic levels. The flow of tourists arriving in Armenia has still not recovered.

As stipulated in the five-year plan and the 2022 budget draft, the Armenian government aims to ensure an annual economic growth of at least 7%, and in a favorable external environment, 9%. According to the Central Bank’s forecasts, Armenia's economy will grow by 5.4% in 2021. Meanwhile, Minister of Economy Vahan Kerobyan expects double-digit economic growth.