Armenia lowers growth forecast to 3.2% as parliament passes 2021 budget

Mary Lazarian 2020
Reuters
Dec 10 2020

By Reuters Staff

YEREVAN, Dec 10 (Reuters) – Armenia’s economy is set to grow 3.2% next year, below the previous forecast of 4.8%, according to a budget plan approved by parliament on Thursday, with the country still reeling from the coronavirus pandemic and war over Nagorno-Karabakh. Activity has been stung by health restrictions aimed at containing the COVID-19 pandemic, but a six-week conflict between Azerbaijan and ethnic Armenian forces over the Nagorno-Karabakh enclave and surrounding areas added to the South Caucasus nation’s economic woes.

Prime Minister Nikol Pashinyan, who swept to power in a peaceful revolution in May 2018, has faced protests demanding his resignation after he accepted a Russian-brokered ceasefire deal last month to end the bloody conflict which secured territorial gains for Azerbaijan.

The overall economic contraction in 2020 is seen at 7.9%, the finance ministry said, with the services, manufacturing and construction sectors taking the biggest hit. The 9.1% third-quarter drop was a slight improvement on the 13.7% crash from April to June.

Finance Minister Atom Janjughazyan said attaining the revised economic growth forecast of 3.2% next year would still require hard work.

“We consider 2021 as exceptional…it’s not clear yet when the recovery of the economy will start and how long it will last,” Janjughazyan told lawmakers in parliament earlier this week.

Facing criticism over limited military expenses in the budget, Janjughazyan said the scale of current uncertainties did not allow for changes right now.

The 2021 budget sees a deficit, covered by internal and external sources, at 5.3% of gross domestic product (GDP), up from the 2.3% expected this year, with revenues at 1.5 trillion drams ($2.9 billion) and spending of more than 1.8 trillion drams.

The annual inflation target is the same as this year, projected at 4%, plus or minus 1.5%.

Armenia, a land-locked country of three million people, bordering Turkey, Georgia, Azerbaijan and Iran, had reported 145,240 coronavirus cases and 2,416 deaths as of Thursday.