“Return of High Prices: Coping with Expensive Food and Energy,” released today, states that the economy is expected to achieve slower growth in 2022 after a strong recovery in 2021, when GDP grew by about 8.5%, as a result of increased tourism and recovery of domestic demand.

According to the EBRD, strong investment growth was driven by earthquake-related public reconstruction.
The macroeconomic environment remains largely stable; Inflation rose to 5.7% on an annual basis in March 2022, reflecting the global rise in commodity prices, but while it has exceeded the central bank target of 3%, it remains lower than in most regional economies.

“The banking sector remains well-capitalized and liquid, with strong credit growth in the first two months of the year and non-performing loans at an all time low since 2014. Meanwhile, the budget is feeling the impact of the energy crisis due to large imports of electricity at significantly higher prices. “The government is also under pressure to support families amid the soaring prices and fear of food shortages.”

“While direct economic and financial ties with Ukraine and Russia are negligible, high uncertainty about the war and its economic repercussions, an expected slowdown in European markets and soaring food and energy prices all pose serious risks to the outlook and is expected to slow short-term growth. “GDP is expected to increase by 3.0% in 2022 and 3.3% in 2023,”according to the EBRD.
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