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The slowdown of Armenia’s economic activity in 2016 mainly stemmed from the decline of real volumes of agriculture and construction volumes, Artur Javadyan, Chairman of the Central Bank of Armenia (CBA), said at the session of the Armenian Parliament, presenting the CBA conclusion on the report of the 2016 state budget performance, reports Panorama.am.

In his words, Armenia recorded 0.2% percent economic growth in 2016 to compare with 3.2% of the previous year and the 2.2% target set for the year.

Nevertheless, according to Mr. Javadyan, positive developments were also registered in industry and service spheres, which saw real growth of 5.1% and 4.1% respectively.

“The slowdown of Armenia’s economic activity was mainly prompted by decline in domestic and foreign net investments in the recent years, reduction of world prices for copper and raw materials, as well as the decline of household revenues due to the decrease in remittances from Russia,” the Chairman said.

According to the official, in 2016 the private investment environment continued to remain week, with recovery trends for growth observed in terms of private consumption. In addition to this, the low inflation trends contributed to reduction of inflation expectations reflected in the level of market interest rates.

“The general fiscal policy has been implemented towards increasing the state consumption and the state capital investments, as a result of which the 2016 state budget deficit in the GDP exceeded the target for the previous year by 2 percentage points (pp), comprising 5.5% of the GDP.

The 2016 economic growth continued to be mainly prompted by the exports, due to its significant growth over imports. As a result, according to the official, the country’s external balance was ensured.

Thus, according to Mr. Javadyan, in 2016 the state budget deficit totalled to 278 billion AMD against the planned 180 billion AMD. “The rise in the state budget deficit naturally affected the state debt, resulting in the state debt- GDP ratio increase, which comprised for 56.7%. In this regard, the 2017 fiscal policy is limited by the fiscal rule of state deficit, the consistent maintenance of which is crucial in terms of ensuring the manageability of the state debt and macroeconomic stability,” the CBA Chairman concluded.