EDB forecasts inflation acceleration in Armenia

The Asian Development Bank (ADB) has released its Asian Development Outlook 2025, outlining economic forecasts for the region, including Armenia.

According to the report, domestic demand will be the primary driver of Armenia’s economic growth, fueled by consumption and investment. Private consumption is expected to rise by 2.5% in 2025, although this growth will moderate to 2.3% in 2026 due to a continued decline in remittance inflows.

Public consumption is projected to grow by 6.7% in 2025, largely driven by increased social transfers. However, it will likely slow to 4.1% in 2026 as economic growth tapers and fiscal consolidation efforts take effect.

Investment is forecast to increase significantly, with a 12.0% growth expected in 2025 and a further rise to 13.0% in 2026. The growth is attributed to higher capital expenditures in infrastructure and social investment projects, which are anticipated to outweigh a slowdown in private investment—particularly in the housing sector. The deceleration in housing investments is partly due to the phased elimination of the income tax refund program for homebuyers in Yerevan, which came into effect in 2025.

Inflation is expected to accelerate moderately but remain contained. With a more expansionary fiscal policy in 2025 and a flexible monetary policy stance throughout the year, along with relatively stable food and commodity prices, average inflation is projected to rise to 3.0% in 2025, before easing to 2.8% in 2026. By the end of 2025, inflation is expected to remain within the Central Bank’s revised target range of 3% ±1 percentage points, as announced in January 2025.