A senior official from the International Monetary Fund said on Tuesday that the Armenian economy is on course to beat IMF forecasts and grow by at least 6.5 percent this year.

Yulia Ustyugova, the fund’s resident representative in Yerevan, cautioned, however, that this growth is “narrowly-based” and largely driven by private consumption, rather than rising investments or exports.

Economic growth in Armenia slowed from 7.5 percent in 2017 to 5.2 percent in 2018. The current Armenian government, which took office following the “Velvet Revolution” of April-May 2018, forecast late last year a growth rate of 4.5 percent for 2019.

Official statistics for the first nine months of this year indicate more robust economic activity in the country. Prime Minister Nikol Pashinian and other senior officials have said that full-year GDP growth should accelerate to 7 percent.

“Our growth projections are very much in line with the authorities’ projections. For this year we project growth to be at around 6.5-7 percent,” Ustyugova told RFE/RL’s Armenian service in an interview.

“We can say that growth has been higher than we expected,” she said. “We have been revising our growth forecasts upwards. This is mostly because consumption -- and mostly private consumption -- has been much stronger than anticipated. So it’s a good thing that economic activity has been growing.”

“The not-so-good thing is that it has been driven by consumption, rather than investment, because it is the investment that is the key building block for future growth. So the challenge remains how to generate sustainable, long-term growth that is driven by investment and exports, rather than consumption,” she added.

The government claims to have already radically improved Armenia’s business environment by breaking up de facto economic monopolies and creating a level playing field for all businesses. Pashinian has repeatedly stated that it is successfully carrying out an “economic revolution” promised by him. His critics counter that so far there has been no significant increase in foreign and domestic investments in the Armenian economy.

Ustyugova suggested that some investors have been in no rush to open new businesses or expand existing ones because of a “transition period” in the country.

“The authorities are still developing a set of priorities that will be guiding the economy in the future,” she said. “So in a sense, it’s a wait-and-see approach that is guiding some investors. Some investors also need to rethink their investment plans in the regional context given the upcoming reforms planned by the authorities.”

The authorities, the IMF official went on, are committed to far-reaching reforms needed for ensuing continued growth. They have already made “notable progress” in improving tax collection and combatting corruption, she said.

Pashinian’s government pledged such reforms before securing in May this year a “precautionary” fresh loan from the IMF worth $248 million. In Ustyugova’s words, a three-year reform program agreed by the two sides is “off to a good start.”