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Revision Downwards: IMF Further Lowers Armenian Growth Forecast

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  • Revision Downwards: IMF Further Lowers Armenian Growth Forecast

    REVISION DOWNWARDS: IMF FURTHER LOWERS ARMENIAN GROWTH FORECAST

    http://armenianow.com/economy/57248/armenia_imf_forecast_economy
    ECONOMY | 01.10.14 | 10:21

    Photolure

    By SARA KHOJOYAN
    ArmeniaNow reporter

    Citing challenges facing the country's economy, the International
    Monetary Fund (IMF) has lowered Armenia's GDP growth forecast from
    4.3 to 2.6 percent.

    Mark Horton, the head of the IMF Armenia mission, said on Tuesday:
    "Armenia is facing a challenging period ahead with the developments in
    the region and with the uncertainties around the sanctions [against
    Russia]." He said the Armenian government should seek to offset the
    unfavorable external factors with major structural reforms implemented
    "as decisively as possible."

    Remarkably, earlier, the world's leading think tank, Moody's Investor
    Service, also lowered Armenia's growth prediction for this year down
    to 2.1 percent, conditioning it by the Western sanctions against
    Russia that it said would also affect the Armenian economy.

    The Armenian government has also admitted the slowdown in economic
    growth, but its figures are far higher than those presented by
    international financial institutions. The country's Central Bank,
    for example, at the beginning of the year forecast Armenia's annual
    economic expansion at the level of 5.2 percent, but later lowered
    it to 3.9 percent, the government of Hovik Abrahamyan lowered it to
    4 percent.

    The IMF representative said that the Armenian government continues to
    under-fulfill the state budget spending, which particularly affects
    large projects and has its impact on economic growth.

    According to Horton, uncertain terms of Armenia's membership in the
    Eurasian Economic Union create general uncertainty which also has an
    adverse effect on the private sector in Armenia.

    The head of the IMF mission said membership in the Russian-led bloc has
    more negative risks than positive expectations for Armenia, which is
    again due to the crisis in Ukraine and the sanctions against Russia,
    which, though, may prove not to be long-term ones.

    "Annually, Armenia may have an additional $150-200 million in customs
    revenues, which is quite a lot of money that the government should
    think about spending," he said.

    Armenia is expected to sign a Eurasian Economic Union accession treaty
    on October 10.

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