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Armenian Central Bank Revises Up Economic Outlook

Finance Minister Tigran Davtian said in June that the growth would continue in the coming months.
YEREVAN -- Armenia's Central Bank has revised upward its forecast for economic growth this year, despite expecting a slight slowdown in the economic recovery in the second half of the year, RFE/RL's Armenian Service reports.

In a report released on August 12, the bank said it predicts annual gross domestic product (GDP) growth of between 5.7 percent and 6.2 percent in 2010.

The figures represent a significant upward revision of the bank's previous growth forecast in May of between 3 percent and 4 percent. Both the bank and the Armenian government had predicted a much slower recovery in January.

According to official statistics, the Armenian economy grew by 6.7 percent in the first half after contracting by as much as 14.4 percent last year. Finance Minister Tigran Davtian said in June that the growth would continue in the coming months.

The International Monetary Fund expects a GDP increase of about 5 percent in 2010.

Central Bank Deputy Governor Vache Gabrielian told RFE/RL that "the whole world has been revising its projections on a monthly basis because there is a lot of uncertainty."

The Central Bank board decided on August 11 not to change its refinancing rate, currently set at 7.25 percent. It had steadily raised the benchmark rate by a total of 200 basis points earlier this year in response to mounting inflationary pressures on the country's economy.

The National Statistics Service reported that consumer price inflation in the country stood at 7.3 percent in the first half, well above the authorities' target band of 2.5-5.5 percent. The authorities hope to bring the inflation rate down to about 6 percent by the end of the year.

National Statistics Service data shows consumer prices falling slowly since April, a trend strongly disputed by economists critical of the government. Many ordinary Armenians also feel that the cost of living has continued to rise in recent months.

Gabrielian insisted the official inflation figures are reliable.

"Inflation is a phenomenon that is calculated in average terms and cannot correspond to the experience of a concrete individual," he said. "From our perspective, [the data] reflects the current consumer-price-index fluctuations quite accurately."