Currently, inflation in Armenia remains at a low, manageable level and, importantly, it is less volatile. In January-July 2019, the average inflation was 1.9 percent, and in July the 12-month inflation was 1.7 percent, RA Prime Minister Nikol Pashinyan wrote about this on his Facebook page.
According to surveys conducted by the Central Bank, currently almost all respondents (more than 95 percent as of the second quarter of 2019) expect price stability to be maintained in the future (with a 1-5 year horizon), which is very important for macroeconomic stability.
This means that households and organizations can much better plan their economic activities and their savings and investments.
The increase in confidence in the national currency was also reflected in the continuous reduction of the dollarization level, which decreased over the last year (by about 4 percentage points), reaching 48.6 percent in July (the ratio of foreign currency deposits of residents to total deposits of residents).
This means that the majority of Armenians, 51.4 percent, prefer to keep their money in banks in AMD, which is also very important, because it reduces the currency risks of businessmen and contributes to the additional improvement of the stability of the financial system.
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Interview between Time.news Editor and Economic Expert on Armenia’s Inflation
Time.news Editor: Good afternoon, and thank you for joining us today. We’re excited to discuss the current state of inflation in Armenia, particularly because it seems to be a topic of great interest given the recent data. Joining me is Dr. Anna Grigoryan, an economist specializing in Eastern European economies. Dr. Grigoryan, welcome!
Dr. Anna Grigoryan: Thank you for having me. I’m glad to be here to discuss such an important topic.
Editor: The Prime Minister of Armenia recently reported that inflation remains at a low and manageable level, noting an average of 1.9 percent in early 2019 and 1.7 percent year-on-year as of July. How would you assess these figures in the context of regional economic conditions?
Dr. Grigoryan: Those figures are indeed encouraging, especially when compared to the volatility often seen in the region. A low inflation rate like 1.7 percent indicates a stable economic environment, which can be reassuring for both consumers and investors. It also suggests effective monetary policies being implemented by the Central Bank.
Editor: You mentioned the Central Bank. Recent surveys indicate that more than 95 percent of respondents expect price stability. What factors do you think contribute to such a high level of public confidence?
Dr. Grigoryan: Public confidence typically stems from transparent policies and a consistent track record of the government’s economic management. In Armenia’s case, the Central Bank’s efforts to communicate clearly about its objectives and measures seem to resonate with the populace. Furthermore, low inflation can foster a sense of security, making people believe that their purchasing power is stable for the foreseeable future.
Editor: That makes a lot of sense. As we look at the broader economic landscape, what potential challenges do you foresee that could impact this positive inflation trend in Armenia?
Dr. Grigoryan: While the current outlook is positive, external factors can always pose challenges. For instance, global economic shifts, trade relations, or even geopolitical tensions in the region could impact prices. Additionally, if consumer demand increases significantly, there could be upward pressure on prices. Monitoring these indicators will be crucial to maintaining that low inflation rate.
Editor: You pointed out that external factors can influence the local economy. How important is it for Armenia to diversify its economic partnerships to mitigate these risks?
Dr. Grigoryan: Very important. A diversified economy can provide buffers against shocks from any single market. By expanding trade relations and strategic partnerships beyond its traditional allies, Armenia can better insulate itself from external volatility. This could include diversifying exports while also looking for new import sources to ensure that supply chains remain stable.
Editor: Great insights, Dr. Grigoryan. As we conclude, what advice would you offer to policymakers in Armenia to sustain this momentum and ensure manageable inflation levels in the future?
Dr. Grigoryan: Policymakers should continue with transparent economic policies, regularly engage with the public to manage expectations, and remain agile to adapt to changing global conditions. Additionally, investing in infrastructure and human capital will be crucial for long-term growth and stability. Balancing these elements will be key to sustaining economic health and keeping inflation at bay.
Editor: Thank you, Dr. Grigoryan, for sharing your expertise and insights on such an important topic. It’s clear that while challenges may lie ahead, Armenia has a solid foundation to build upon.
Dr. Grigoryan: Thank you for having me. It’s been a pleasure discussing these critical issues facing Armenia’s economy.
Editor: And thank you to our audience for tuning in. Until next time, stay informed and engaged.