YEREVAN (Reuters) - Armenia’s economy will contract by 4% in 2020 due to the negative impact of the coronavirus pandemic, but is expected to recover and grow 5.5% next year, Martin Galstyan, the country’s central bank head, said on Tuesday.
The central bank had previously forecast a contraction of 0.7% this year after growth of 7.6% in 2019. The worst-affected sectors of the economy are services and construction as well as international tourism, Galstyan said while presenting the bank’s quarterly inflation report.
Inflation is expected to be around 1.9% in 2020. Armenia’s consumer price index declined 0.1% in May month-on-month, but rose 1.2% year-on-year.
In the report, the bank said the amount of private remittances would decline by 22-25% this year due to the drop in oil prices in Russia, Armenia’s main trade partner, and Moscow’s ban on migrant workers during the pandemic.
However, it said that would not have a significant impact on GDP.
The central bank cut its key refinancing rate to 4.5% from 5% last month, citing weakening external and internal demand as well as a slow pace of recovery.
The country of around 3 million people had reported 25,542 cases of the coronavirus as of Tuesday, and 443 deaths. It is the worst-affected country in the South Caucasus region.
Reporting by Nvard Hovhannisyan; writing by Margarita Antidze; editing by Kirsten Donovan