Armenia's economic growth will slow to 5.25% in 2026, and inflation will remain high in the near future – IMF

YEREVAN, June 10. /ARKA/. Armenia’s economic activity remains strong. Real GDP growth is expected to decelerate to around 5¼  percent in 2026 as domestic demand softens and some trade disruptions from the war in the Middle East materialize, the International Monetary Fund (IMF) said in a press release..

According to IMF, inflation is expected to remain elevated in the near term on the back of commodity price increases and increased logistics costs from trade re-routing, but return to Central Bank of Armenia’s (CBA) target over the projection horizon.

Short-term risks to the outlook stem from the unprecedented uncertainty related to the war in the Middle East. Over the medium term, a potential slowdown in the growth of trading partners and tighter global financial conditions could affect Armenia. However, external and financial sector buffers remain strong.

Armenian government's 2026 state budget projects 5.4% economic growth. According to preliminary statistics, the GDP grew by 4% in the first quarter of this year compared to January-March 2025.

According to the Central Bank's monetary policy report for the first quarter of this year, the GDP growth is expected to be 7.1-4.7% by the end of 2026, 5.7-5.3% in 2027, and 4.9-5.2% in 2028, depending on various scenarios.

Armenian economic growth forecasts from international financial institutions for 2026 are follows: EDB - 5.3%; WB - 5.3%; IMF - 5.25%; ADB - 5.5%, EBRD - 5.5%, S&P Global Ratings - 5.3%; Fitch Ratings – above 5% (for 2026-2027).

Armenia's 2026 state budget projects inflation at 3% (±1%). In May, inflation was 4.2% (y/y) versus 5.3% (y/y) in April.

According to the Central Bank's monetary policy report for the first quarter of this year, inflation is expected to be 4.4-3.3% by the end of 2026, depending on scenarios (A-B), with a forecast of 3.5-3.1% for 2027 and 3.2-3.1% for 2028.-0-