Middle East Tensions Could Push Inflation in Armenia Higher, Central Bank Chief Warns

YEREVAN – Escalating conflict in the Middle East could increase inflation in Armenia by 1.2% to 1.7%, according to Central Bank Governor Martin Galstyan.

The risks are linked to rising oil prices, increased costs of alternative trade routes, and the potential replacement of food imports from Iran.

“As you can see, the underlying factors include higher oil prices, increased costs due to alternative import routes, and the partial substitution of food products imported from Iran. This remains within the realm of risks—we are not saying it will definitely happen, but if it does, the impact on inflation would be between 1.2% and 1.7%,” Galstyan stated.

Regional tensions are also increasing global risks, while potentially slowing economic growth and fueling inflationary pressures. According to Galstyan, a decline in global economic activity would inevitably affect Armenia’s domestic economic development.

“In our assessment, the ongoing conflict in the Middle East increases the risk of economic slowdown while also creating inflationary pressures—an undesirable outcome for us. If global economic activity declines, it will inevitably impact economic growth and development within Armenia,” he added.

Additional risks for Armenia include reduced external demand, tourism-related psychological factors, and limited access to Middle Eastern markets. In particular, a weakening of the United Arab Emirates’ role as a trade hub could lead to logistical challenges for both exports and imports.