Following a strong outturn in 2017, growth in Armenia will moderate in the years ahead but remain robust. Solid external demand and recovering commodity prices will be supportive of economic activity, as will private consumption.
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
Chapter 2: 10-Year Forecast
The Armenian Economy To 2027
Convergence To Stall
Our relatively pessimistic medium-term view on the Armenian economy continues through our long-term forecast to 2026. We believe the lack of economic and political reforms enacted by the government and the pivot away from the EU will hinder long-term economic activity. We caution that political tensions with neighbouring Azerbaijan and Turkey are expected to remain a key risk to the country's economic outlook over the next 10 years.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
BMI Political Risk Index
Upcoming Presidential ElectionsTo Be Symbolic
Armenia's March 2018 presidential election will be largely symbolic, given that the country is in the process of transitioning from a presidential to parliamentary system. While it remains unclear who the new president will appoint as prime minister, set to be the most powerful figure in Armenia, it is likely that they will be from the ruling Armenian Republican Party, and we expect broad policy continuity as a result.
EEU Unlikely To Materially Boost Growth Prospects
The Eurasian Economic Union is unlikely to be a positive driver of growth for its member states. The union has made its members increasingly reliant on Russia, at the expense of diversifying growth opportunities with other regions.
Long-Term Political Outlook
Nagorno-Karabakh Conflict To Stay At Centre Stage
Armenia will continue to have difficult relations with neighbours Turkey and Azerbaijan, as a result of sensitive historical grievances and strong domestic pressure groups on both sides. Nagorno-Karabakh will remain a particular potential flashpoint given the high profile of the region and ongoing talks, which are set to test commitment to peace in both Yerevan and Baku. The heavy troop presence on both sides of the border will remain a key risk. That said, the willingness of regional heavyweights Russia and Turkey to support the ongoing peace process means that a 'hot war' is not inevitable.
Chapter 4: BMI Global Macro Outlook
Growth, Inflation And Rates On The Rise
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y