The escalation of the conflict in the Middle East may have an impact on inflation in Armenia; according to our estimates, it will amount to 1.2 to 1.7 percent. The governor of the Central Bank of Armenia (CBA), Martin Galstyan, told this to a press conference Tuesday.

"This is within the range of risks, we are not saying that this will happen. But if it does happen, the impact on inflation [in Armenia] will be 1.2 to 1.7 percent," Galstyan added.

According to him, the conflict in the Middle East, on the one hand, increases the risks of an economic slowdown, and on the other hand, it has a certain potential in terms of increasing inflation.

“This will be a rather undesirable phenomenon for us, because if there will be a decline in economic activity in the global economy, it will irreversibly affect economic growth and economic developments within Armenia,” Galstyan noted.

The CBA chief said that if external demand decreases, it will naturally affect the results of the Armenian economy.

“They will be not only economic, but also psychological. For example, people who were determined to visit Armenia this year, seeing that the developments around Armenia are going according to some bad scenarios, may refrain from visiting Armenia this year,” Galstyan noted.

From the point of view of potential risks, the limitation of the possibility of Armenian companies selling their products in the Middle Eastern markets may also be a problem.

The CBA governor said that there is no monitoring on inflation in Armenia at the moment, it should already be reflected in March inflation, but the March inflation figures are not yet available, there are those of February, which do not reflect the developments that are taking place.

Martin Galstyan also emphasized that a possible increase in oil prices could lead to an increase in the price of goods in Armenia from the supply side, as this would increase the cost price.