The CBA predicted in March that the Armenian economy will grow by 1.4 percent after shrinking by 7.6 percent last year due to the coronavirus pandemic and the war in Nagorno-Karabakh.
Galstian said the bank now expects faster growth. He declined to specify its revised projections to be publicized soon.
“For example, in the first quarter [of this year] our indicator of economic activity was down by 2 percent, rather than 6 percent which had been forecast by us,” he said. “Services are doing better than expected … and there are more incoming cash remittances and a number of other factors.”
Galstian reported at the same time that the number of Armenian companies and households seeking commercial bank loans has fallen despite the unfolding economic recovery.
The CBA governor suggested that many Armenians may be holding back on major expenditures planned by them for now.
“That is, people who planned on buying a new washing machine or a TV set may be waiting for their revenues to recover [to pre-crisis levels] before applying [for a loan,]” he said.
Galstian also cautioned that consumer price inflation in Armenia could rise further in the months ahead due to external factors. “Prices in the global commodity markets are continuing to grow, which will have some impact on Armenia,” he said.
According to official statistics, annual inflation already reached 6.2 percent in April, well above a 4 percent target set by Armenia’s government and the CBA for 2021. Galstian admitted last month that the authorities will likely fail to meet the target.
The higher-than-projected inflation was driven by rising good prices. Government data shows particularly drastic increases in the cost of mostly imported staple foodstuffs such as cooking oil and sugar.