The Immediate Impact of COVID-19 on the Armenian Economy

The immediate economic impact of the crisis is estimated to be around $744 million, which is equivalent to more than six percent of the country's gross domestic product (GDP). This loss in overall GDP is expected to occur between mid-March 2020 and the end of July 2020. The economic impact of the crisis is considerable, and Armenia's macroeconomic resilience is only middling. The country's ability to carry out fiscal and monetary measures, if not accompanied by international financial support, is constrained and could lead to economic instability, unsustainable fiscal balances, inflation, or balance of payments shortfalls. The COVID-19 Economic Impact Model used in this analysis provides an estimate of the magnitude of the immediate economic impact of the crisis. The model takes into account various factors, including the duration and severity of the shutdowns, the impact on employment and poverty, and the country's macroeconomic resilience. The model presents three scenarios: high, moderate, and optimistic impact. The high-impact scenario estimates a loss of $744 million in GDP, while the moderate-impact scenario estimates a loss of $709 million. The optimistic-impact scenario estimates a loss of $670 million. The scenarios also estimate the impact on employment and poverty, with the high-impact scenario estimating a loss of 60,000 jobs and 185,000 people falling into poverty. The shutdowns may have eased too soon, according to the FAST program, which agrees with the Economist Intelligence Unit's concern. The trends in easing of shutdowns, as clear in Figure 1 and Figure 3, coupled with the rapidly rising daily deaths and new cases, as shown in Figure 4, suggest that the shutdowns may have been lifted too quickly. The COVID-19 pandemic has had a significant impact on the Armenian economy, and the country's macroeconomic resilience is only middling. The economic impact is considerable, and the country's ability to carry out fiscal and monetary measures is constrained. The COVID-19 Economic Impact Model provides an estimate of the magnitude of the immediate economic impact of the crisis and highlights the need for international financial support to mitigate the economic impact of the crisis. The Armenian economy is expected to experience a significant decline in GDP, with the high-impact scenario estimating a loss of $744 million. The decline in GDP is expected to be accompanied by a significant increase in poverty, with the high-impact scenario estimating an increase of 185,000 people falling into poverty. The decline in employment is also expected to be significant, with the high-impact scenario estimating a loss of 60,000 jobs.