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In the conditions of geopolitical developments and preserving uncertainties going on in 2023, the world economic activeness and the demand continued to slow down. In case of the abovementioned developments and the restrictive monetary policy being implemented in a number of countries essential decrease of food and energy carriers was especially observed, as well as the inflationary environment in the world economy was clearly mitigated. In these conditions the external inflationary pressures on the economy of the Republic of Armenia in the first half of the year 2023 were essentially weakened, and in the second part of the year deflationary effects have already been observed. The Governor of the RA Central Bank (CB) Martin Galstyan said this, presenting the annual programme on the activity of the Central Bank.

“During the year 2023, non-expected high activeness was registered in the economy of the Republic of Armenia conditioned by the recorded high style in the spheres of services and construction. In parallel the aggregate demand was also maintained at high level, which in the first half of the year was expressed especially by the essential increase of the external demand manifested in the sphere of services. The considerable inflows of the international visitors, including the tourists and finances continued promoting it,” the rapporteur underlined and added that by the influence of the mentioned factors non-essential, but certain evaluation of the dram was recorded in the RA currency market. It was noted that positive developments were also recorded in the branches of the IT and the processing industry, which was expressed by the tendencies of the production potential and the export increase in those spheres.

According to Martin Galstyan, weakening of external demand was observed in the second half of the year connected with the slowing down of the tourism increase rate. In parallel with that the internal demand was considerably enlivened conditioned by the high growth of private

consumption, which greatly promoted the expenditure of the savings accumulated before and the continuous increase of incomes.

“During the year 2023, the 12-month inflation decreased by 8.9% and in the end of the year was formed in the negative space, making up – 0.6%,” Martic Galstyan underscored.

The CB Governor also presented the report of the first quarter of the monetary policy for 2024 and the information on the administrative expenditures and capital investments of the Central Bank for 2023.

The rapporteur informed that from 2024 the CB invested a new system of development of monetary policy, its implementation and communication, which is based on the principle of reasonable management of risks. It was noted that in the first quarter of 2024 in the world and in the main partner countries of Armenia the risks of slowing down of the economic growth were preserved. The world inflation continues slowing down, but in the partner countries the prices of the goods and services being characterized at hard prices still remain relatively high. “In the first quarter of the year 2024, high economic activeness was preserved in Armenia, and the considerable growth of the trade and industry branches greatly promoted it. The external demand towards the internal services clearly weakens, and the high growth of private investments continues boosting the internal demand,” the CB representative said.

Martin Galstyan also touched upon the inflation environment formed at the beginning of this year and the policy pursued by the CB corresponding to it.

According to the rapporteur, in accordance to the scenarios being presented in the monetary policy programme, the in the short-term horizon of 2024 the inflation will be preserved at the low level from the target indicator, at the end of the year it will be 1.3-1.5%.

Martin Galstyan answered the MPs’ questions, which related to the fluctuations of the exchange rate, the amnesty of credit histories and the change of interest rates, the policy implemented by the CB on the regulation of the crypto actives, etc.

The annual programme on the CB activity was debated at May 13 sitting of the NA Standing Committee on Financial-Credit and Budgetary Affairs.