The Eurasian Development Bank (EDB) has projected that Armenia will experience near-zero inflation throughout the third quarter of 2023. Multiple factors, including the strengthening of the national currency, the dram, a reduction in external price pressures, and the implementation of stringent monetary measures, support this forecast.
In response to this context, the Central Bank of the Republic of Armenia recently decided to decrease the refinancing rate by 0.25 percentage points for the second consecutive time, bringing it to 10.25%, as detailed in the EDB's weekly review.
The review highlights that July witnessed a y/y decrease of 0.1% in prices within Armenia, following a 0.5% decline the previous month. M/m deflation was 1%.
A 3.9% y/y contraction in the food segment during July largely influenced this decline, following a 5.1% contraction observed the month before. This dip was attributed to the reduced cost of imported products. Additionally, prices for imported fuel experienced a 7.2% y/y decline, while the price growth rate for other non-food goods and services slowed down.
The Armenian government has set a growth projection of 7% for 2023, accompanied by an anticipated inflation rate of 4%, with an acceptable range of ±1.5%.
Recent data from the National Statistical Committee reveals that Armenia's economic activity expanded by 11.4% during the first half of 2023 compared to the same period in 2022.
The Central Bank anticipates a 6.9% growth rate for the economy this year while projecting that the 12-month inflation rate will hover slightly below the 4% target.
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