The World Bank project a 2.7 percent growth in Armenia in 2017, reflecting the sustained expansion of the tradable sectors and a modest recovery in domestic consumption.

“Medium term growth is projected to average 3-3.5 percent a year, given structural weaknesses in the domestic policy framework, and remaining uncertainties in external environment. The government’s planned expenditure restraint and full implementation of the Tax Code are expected to keep the fiscal deficit below 3 percent of GDP over the medium term. Policy changes envisaged in the Tax Code would boost revenues by 2 percentage points of GDP by 2021,” the World Bank says.

Future poverty reduction will hinge on the recovery of the domestic economy, labor-market dynamics, and remittance inflows. Low growth rates, unfavorable external conditions, and limited fiscal space could slow the pace of poverty reduction; as a result, the poverty rate is projected to fall from 23.8 percent in 2017 to 22.2 percent in 2019.

According to a new report, Armenia’s medium-term outlook remains sensitive to internal and external factors, which entail both upside and downside risks. Growth prospects depend on the government’s ability to scale up high-quality investment, and speed up structural reform.