Armenia’s central bank sees economy contracting 6.2% in 2020

Sept 15 2020

YEREVAN, Sept 15 (Reuters) – Armenia’s central bank said on Tuesday it expected the economy to contract by 6.2% in 2020 due to the negative impact of the coronavirus pandemic, but it should get back to 4-5% growth next year.

The central bank had previously projected a contraction of 4% for this year and a recovery of 5.5% in 2021 after growth of 7.6% in 2019.

“The contraction is mostly connected to the construction and agriculture spheres,” Martin Galstyan, the central bank head, told a news conference.

He said annual inflation was expected to be around 2.5% in 2020 and in a range of 1.7%-2% in 2021.

The central bank cut its key refinancing rate to 4.25% from 4.5% on Tuesday, citing low inflation as well as the delay in recovery in external and internal demand.

“The central bank is inclined to continue the weakening of the monetary conditions in the future given expected economic developments,” Galstyan said.

Armenia’s consumer price index declined by 0.1% in August, month-on-month, but rose 1.8% year-on-year.

The country of around 3 million people, has registered 46,119 confirmed coronavirus cases and 920 deaths from COVID-19. It is the worst-affected country in the South Caucasus region. (Reporting by Nvard Hovhannisyan; Editing by Ed Osmond)

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