2024-09-07 22:54:18
During the year before the 4th quarter of 2020, a low inflation environment was maintained in Armenia, which was determined by both demand and supply factors, the Central Bank of Armenia reports.
In the 4th quarter of 2019 and the 1st quarter of 2020, the RA government implemented a certain restraining fiscal policy, and mainly deflationary effects were transferred from the outside world.
According to the Central Bank, the changes in the competitive field observed in a number of product markets and the shift of demand from the market of short-term consumer goods to the market of long-term consumer goods also contributed to the low inflation. During that time, a relatively high growth of private consumption was recorded, mainly due to the positive impact of lending by the financial sector.
Bankers report that in the second and third quarters of 2020, significant deflationary factors have emerged, mainly due to the Corona epidemic that broke out in the world and in Armenia since the beginning of the year, the measures taken to prevent it, and behavioral changes.
“In the current situation, despite the significant stimulating fiscal policy implemented, a significant decrease in economic activity and aggregate demand was recorded, mainly due to the circumstances of the decrease in private consumption and postponement of investments under the great uncertainties related to the economic outlook.
“In order to neutralize inflationary pressures and bring inflation closer to the target rate over the projected 3-year horizon, the Central Bank increased the amount of monetary stimulus during the specified period by gradually reducing the refinancing rate by a total of 1.25 percentage points; 2020 at the end of September, it is 4.25%”, it is stated in the Central Bank report.
The Central Bank also reports that the 12-month inflation should be kept at a low level in the short term, and should approach and stabilize around the target 4% indicator in the medium term.
In September 2020, the 12-month inflation was 1.4%.