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Armenia Country Risk Report Q1 2019

Armenia Country Risk Report Q1 2019

The upcoming snap parliamentary election in Armenia is likely to result in the re-election of the current interim government under Prime Minister Nikol Pashin-yan, which has been in place since May

This will be positive for the domestic political and economic reform outlook, although we see little change in foreign policy

However, so long as the HHK (the previous ruling party) retains a sizeable number of seats in parliament, its cooperation is necessary for any major moves the government wishes to make and it will still be able to attempt to block major pieces of legislation – keeping uncertainty elevated

Having come in at a five-year high in 2017, real GDP growth will moderate over the coming years but remain above recent averages

We expect economic growth to moderate over the coming years, in large part as Russia's recent economic recovery runs out of steam

The Armenian government's ongoing commitment to fiscal consolidation will also result in economic growth slowing in the years ahead

Despite losing steam, we expect Armenia's economic growth in the years ahead to remain above recent averages

This is largely due to higher commodity prices, in particular copper prices, given Armenia's reliance on mining-related industries for growth

While political uncertainty is likely to remain high over the coming months, we are ultimately expecting an improvement in the political outlook We would expect this to benefit longer-term growth potential

Key Risks

The recent political turmoil in Armenia has the potential to heighten uncertainty in the near term, weighing on domestic demand

Given the close economic links between Armenia and Russia, another drop in Russian growth would hit the Armenian economy hard by depressing remittances inflows from, and exports to, Russia

A sharp decline in global metal prices would negatively impact Armenia's economy and result in a sharp decline in foreign investments, export growth and worsen labour market conditions

With tensions between Armenia and Azerbaijan to remain high, the risk of an all-out war between the two remains a constant threat to regional stability


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Armenian Growth To Slow But Remain Above Recent Averages
GDP By Expenditure Outlook
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: GDP GROWTH FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
10-Year Forecast
The Armenian Economy To 2027
Convergence To Stall
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Armenian Snap Election To See Pashinyan Government Re-Elected
Armenia Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsLong-Term Political Outlook
Geopolitical Tensions A Drag On Long-Term Growth
Global Macro Outlook
Inflation And Policy Risks Rising
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % Y-O-Y
Index Tables
TABLE: ARMENIA – MACROECONOMIC DATA & FORECASTS

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