Dramization process in Armenia to continue in 2007

Arminfo
2007-04-14 16:48:00

During 3 quarters of 2007 and the first quarter of 2008 Armenia will
still undergo the process of dramization, the high rates of which have
been observed since the second half of 2006. the growth rates of the
AMD aggregates will slow down since the second half of 2007, the press
service of the Central Bank of Armenia told ArmInfo.

According to the CBA’s forecast, the monetary indices will mainly
remain within the limits of the forecast framework. The high rates of
economy crediting will also remain in 2007, this being conditioned by
the considerable profit of the commercial banks in 2006 and the
implementation of large programs on account of the funds of the filled
up authorized capital, the source says. Particularly, the matter
concerns the increase of mortgage credit lending. In some spheres of
economy inflation is forecast for a period of 12 months. However, as
per the CBA data, the inflationary inflation will be much milder. If
earlier the annual inflation level was forecast at 4.1%, in December
2007 the annual inflation is expected to total 3.5, and in the first
quarter of 2008 – up to 3.3. According to the CBA, in March 2007 the
annual inflation rate totalled 4.4%, which is by 0.7% lower than the
December 2006 forecast of the CBA. Besides, the CBA Council considers
that there are possible risks of both a rise and a fall of the factual
inflation index, however, their total balance points out a decrease of
inflation. Particularly, the risk of the rise of the factual
inflation index is connected with a possible rise in international oil
prices which is conditioned by the development of the political
situation which can create an inflationary pressure. As for the risks
of the fall of the factual inflation index, they may be connected with
an increase of outflow of currency in case of a rise in prices for
base metals, but the AMD consolidation may result in a drop of prices
for imported goods and a restrained impact on inflation. Besides, the
main risks of the real sector are connected with the state of the
agriculture and may be conditioned by a high yield level in case of
favorable climatic conditions, and this may result in a formation of
deflationary pressure. The CBA Council has taken a decision to reduce
the rate of refinancing by 0.25% to 4.5%. The rates of interest on
lombard credits and deposits are fixed at 7,5% and 1,5 respectively.