YEREVAN (Reuters) — Armenia’s economy will shrink by 5.8 percent in 2009, more than originally feared, the Central Bank of Armenia (CBA) predicted on Tuesday.
The CBA said it had revised its original forecast of a 3.0 percent contraction based on first quarter results, which saw GDP shrink 6.1 percent. GDP in the first quarter of last year grew 10.1 percent.
The bank cited falling chemical and metal prices in world markets, two industries Armenia’s economy depends heavily upon.
The South Caucasus country has been hit hard by the global economic crisis and the impact of its much larger economic ally Russia sliding into recession.
The International Monetary Fund predicted last week that GDP in Armenia would shrink by 5.0 percent this year.
Armenia is now drawing on a $540 million standby loan from the IMF, which it secured in March after opting to float its Dram currency.
The government is also expected to receive a $500 million “stabilization credit” from Russia by June.
The government has also obtained pledges for an $800 million loan from the World Bank alone. More than a quarter of the sum would be channeled into small and medium-sized businesses in the form of low-interest loans.