Forecast of Economic Growth in Armenia
Anahit Mkrtchyan, Gevorg Petrosyan
"Katchar" Collection of Scientific Articles. International Scientific-Educational Center NAS RA
The article presents the development of methods for forecasting economic growth. Since the 1950s, researchers have paid more attention to economic growth research. Many analysts and economists have focused on methods of forecasting economic growth and have tried to find the principal methods that influenced it. In the 2000s, economists found out that more than 500 exogenous or indigenous factors affect economic growth. Every national economy has its specifications which makes the forecast of
... economic growth uncorrelated with the others. Some of them are heavily affected by oil and gas production, the others – by financial or customer service and a dozen of national economies are affected by the production in agriculture . The economy of Armenia is not an exception. The author showed dynamics of Armenian economic growth, by which factors it has been affected, brought some comparisons with the region's countries. The authors used various econometric models to predict economic growth. The tiniest model, which the author constructed based on the ordinary least squares method, showed that Armenia's economic growth is mainly affected by four factors: Foreign Direct Investments, exports, national savings, and the amount of provided loans in Armenia. The quality of the model was 98% which is very high. The most considerable affection have foreign direct investments (FDI). If the FDI increases by 1 billion dollars, gross domestic product (GDP) will rise by 4.52 billion dollars, 36% of Armenia's GDP in 2019. The affection of Exports is not low either. If the amount of Exports increases by 1 billion dollars, that would raise gross domestic product (GDP) by 1.58 billion dollars which is 13.6% of Armenia's GDP in 2019. The author also tried to predict the economic growth of Armenia for ten years, from 2020-2029. The author used both ARIMA and SARIMA models to forecast economic growth. The results were interesting because they showed the economic crisis of 2020 due to the COVID-19 pandemic and the need for change in fiscal and monetary policies. It can be a warning sign to the ministry of Finances, Central Bank of Armenia, to consider critical changes in these policies.