2017年-世界发展银行全球_Armenia_Country_Economic_Update_FallWinter_2017-18___A_Window_of_Opportunity_to_Tackle_Challenging_Reforms_32页_2mb

Summary of Armenia Country Economic Update - Fall/Winter 2017-18

Core Content

This document provides an overview of Armenia's economic performance and structural reform agenda for the period 2017-18. It highlights the country's economic recovery, fiscal consolidation, and the challenges it faces in implementing necessary reforms to sustain growth and improve social outcomes.

Main Points

Economic Performance

• Growth: The Armenian economy showed better-than-expected performance in 2017, with real GDP growth of about 4%, the fastest since 2013. Growth was concentrated in the industry and services sectors, particularly trade, while construction remained a drag.
• Inflation: Deflation ended in 2016, and inflation increased in 2017, reaching 1.6% in May and falling to 1.2% by October. Core inflation was 2.4% in October. Food prices, especially meat and vegetables, were the main drivers of inflation.
• Trade: Exports grew significantly, driven by higher metal prices and improved Russian economic conditions. However, the trade balance deteriorated due to strong import growth. Exports of copper, gold, and aluminum increased in value.
• Tourism: Tourist arrivals increased by 21% in the first nine months of 2017, with a significant share coming from Russia and Iran. The sector has growth potential with improved infrastructure and marketing.
• Remittances: Remittances started to rise in 2017 after a decline in 2016, with a 12% year-on-year increase in the first half of 2017. Russia remained the largest source of remittances, accounting for about 80% of total transfers.

Fiscal Policy

• Deficit: The 2017 budget deficit was expected to be around 2.8% of GDP, down from 5.5% in 2016. The government exceeded the fiscal rule's debt-to-GDP threshold of 50% and constrained the deficit to below 3% of GDP.
• Tax Revenue: Tax revenue increased by 6% in the first nine months of 2017, mainly from VAT, excise, customs duty, and environmental taxes. However, it fell short of the revised budget projection by 7%.
• Fiscal Consolidation: The 2018 draft budget continues fiscal consolidation, projecting a deficit of 2.7% of GDP. Domestic financing will account for half of the deficit, while foreign financing will decline as a share of GDP.

Structural Reforms

• Reform Program: The government approved a reform program for 2017-2022 to boost growth, attract private investment, and improve the business and investment climate.
• Key Reforms: The agenda includes reforms in public administration, the business environment, and the social welfare system. The goal is to open markets, improve connectivity, develop the private sector, and build national resilience.
• Challenges: The main risk to growth is the slow implementation of critical reforms. The World Bank emphasizes the need to accelerate these reforms to capitalize on the current growth momentum.

Investment and External Sector

• FDI: Foreign Direct Investment (FDI) increased by 30% in the first half of 2017 but remained low and undiversified. Most FDI went to the mining sector, and the government has taken steps to improve the investment climate.
• Current Account: The current account deficit worsened in 2017 due to strong import growth and a moderation in remittances. The deficit was expected to be 2.3% of GDP for the year, compared to 2.3% in 2016.

Key Information

Social and Labor Market Indicators

• Employment: The employment rate remained low, around 50% of the working-age population, with high unemployment (17.8% in Q2 2017). Yerevan had the highest unemployment rate.
• Poverty: The national poverty rate fell slightly from 30.0% in 2014 to 29.4% in 2016. However, growth in rural areas was limited, and regional disparities persist.
• Consumption: Consumption growth for the bottom 40% of the population was lower than for the total population, contributing to inequality and development gaps.

Monetary and Exchange Rate Policies

• Monetary Policy: The Central Bank of Armenia (CBA) eased monetary policy in 2017, with the policy rate remaining at 6% since February 2017. Real interest rates remained high at around 5%.
• Exchange Rate: The Armenian dram (AMD) remained relatively stable against the US dollar (USD) in 2017, supported by higher remittances and a recovery in tourism. The real effective exchange rate depreciated by 8% between January and end-August.

Financial Sector

• Bank Capital: Banks entered 2017 with a stronger capital position due to a six-fold increase in minimum capital requirements. The average capital adequacy ratio reached 20%, above the minimum of 12%.
• Banking Landscape: The number of banks operating in Armenia decreased to 17 in 2017 due to mergers and acquisitions.

Risks and Outlook

• Growth Risks: The main risk to the outlook is the slow implementation of structural reforms, which could undermine the current growth momentum.
• Economic Outlook: The World Bank expects moderate growth of around 4% for 2017 and a sustained recovery in the medium term. The 2018 state budget is expected to continue fiscal consolidation and support growth through targeted investments.

Special Topic: Population, Migration, and Growth

• Emigration: Net out-migration has been a significant driver of population dynamics in Armenia. It has contributed to a decline in the working-age population and reduced labor force participation.
• Impact on Growth: Emigration has negatively affected labor supply and economic growth. Policies to address brain drain and support returning migrants are recommended to mitigate these effects.
• Policies to Address Emigration: The document suggests policies to improve labor market conditions, increase employment opportunities, and encourage remittances to be reinvested in the economy.

Conclusion

Armenia has shown signs of economic recovery in 2017, with growth and improved inflation. However, the country faces significant challenges in implementing structural reforms to sustain this momentum. Fiscal consolidation has been achieved, but continued efforts are needed to support growth and reduce inequality. Addressing emigration and improving the investment climate are critical to long-term economic development.