PanARMENIAN.Net - Citing Armenia’s economic activity index growth, the Eurasian Development Bank (EDB) has revised upwards its outlook for the country's GDP growth in 2016 from its previous assessment of 2-2.5% to 2.6%, ARKA reports.

According to EDB’s latest Macroeconomic Overview, the economic growth in Armenia in the first quarter of 2016 was higher than expected. The Macroeconomic Overview notes that the increase in production capacities and in basic exports, despite unfavorable prices at international commodity markets and weaker external demand, were instrumental in securing 4.4% year-on-year GDP growth in quarter one of 2016.

In April 2016, the economic activity index grew to 6.8% against the same period in 2015, securing a 6% growth for the first four months of 2016 in annual terms. According to the National Statistical Service of Armenia, economic activity index in January-May amounted to 5.5%.

"Despite an increase in public and private sector salaries, the recession in the Russian Federation will hold back recovery in consumer demand due to the reduction of factor incomes and remittances," the EDB says.

According to EDB analysts, weak domestic demand, the growth in mining industry output and increase in exports will remain the main drivers of economic expansion in Armenia in 2016.

EDB also says the lowering of the refinancing rate in May 2016 to 7.75% by Armenian central bank was aimed at supporting domestic demand, along with measures taken by the government to encourage investments and lending.

In the medium term perspective the revitalization of domestic demand and the implementation of infrastructure projects are expected to push economic growth up to 4.2% in 2017 and 4.1% in 2018, according to EDB.

The Armenian government’s projection of GDP growth for 2016 is 2.2%. World Bank’s and IMF’s forecasts is 1.9%