In the second quarter of 2023, higher-than-expected economic activity is observed in Armenia, which is mainly contributed by the high growth recorded in the construction and services sectors. The governor of the Central Bank of Armenia (CBA), Martin Galstyan, announced this at the press conference held in the CBA Tuesday.

"The positive changes being observed in the labor market and the increase in productivity [in Armenia] also cause a certain increase in the potential growth of the economy.

"On the other hand, the sustained high external demand and the increase in income in the economy positively contribute to the expansion of demand. As a result of the significant weakening of the inflationary influence from the external sector, the implemented restraining monetary policy and the appreciation of the [Armenia] dram, the inflationary environment in Armenia continues to soften at a rapid pace.

"Nevertheless, in the conditions of high demand and inflationary expectations, the inflation of services and some goods is adjusted more slowly," Galstyan said.

According to the governor of the CBA, its board considers it appropriate to reduce the policy rate.

"The board will be consistent with adequate actions to ensure demand regulation and stabilization of inflation expectations.

"In the outlined scenario of the monetary policy, the 12-month inflation will remain below the target level in the near future, then it will gradually increase and stabilize around the target 4% indicator in the medium term," said Galstyan.

The CBA board estimates that the risks of inflation deviation from the planned trajectory are mostly balanced. And in the event of risks appearing in any direction, the board will adequately respond and ensure the goal of price stability.