World Bank (WB) reviewed the economic growth projection fօr Armenia, establishing it to be 3.1% instead of previous 1.9%.

This is stated in the “Polarization and Populism” report World Bank published yesterday, which overviews the economic situation in Europe and Central Asia.

World Bank explains the increase in projection by raise of external demand in Armenian economy.

“As the global economy rebounds and Russia’s recession passes its nadir, economic activity in Armenia is expected to moderately accelerate over the medium term. However, structural weaknesses and the slow recovery of domestic demand due to stagnant remittances will slow its expansion,” the report reads.

World Bank experts believe that a combination of relatively weak revenue collection, moderate economic growth and increased demand for social spending will keep fiscal pressures elevated through the end of the year. The fiscal deficit is projected to reach 4.3% of GDP, and public debt stock is expected to exceed 50% of GDP.

Nevertheless, World Bank expects the fiscal deficit to narrow over the medium term, owing to introduction of the new tax code, which will expand the tax base, rationalize tax rates and close major loopholes in the existing legislation.

World Bank has modest but positive growth projections for agriculture and industry, combined with an increase in real wages in both the public and private sectors, which are likely to support continued poverty reduction during 2017-18. As a result, the poverty rate is projected to decline from 24.9% in 2016 to 23.2% in 2018.

“The easing of international sanctions against Iran in 2016 has created a unique opportunity for Armenia to access new export markets and to serve as an overland shipping corridor between Iran and Russia,” state the authors of the report.

Moreover, they believe that access to Iranian oil may increase competition in the domestic energy market and reduce Armenia’s reliance on Russian fuel imports.

The report notes that a slower-than expected recovery in prices for Armenia’s critical metal exports represents significant risks to economic growth and job creation.

The experts are worried that the municipal, legislative and presidential elections scheduled to take place over 2016-18 could delay the implementation of much needed structural reforms to improve the business environment, investment and productivity growth.