Yerevan: Oxford Economics expects the incumbent Civil Contract to win the Armenian parliamentary elections in June, APA-Economics reports. A victory would likely clear the way for a referendum to remove references to Karabakh from the constitution, facilitating ratification of the US-brokered Armenia-Azerbaijan joint declaration and the restoration of trade and transport links.

According to Azeri-Press News Agency, this development could boost investor confidence. However, Senior Economist Mateusz Urban warns that continuation of Civil Contract's reform mandate also brings fiscal and overheating risks. The party is expected to pursue expansionary policies, particularly through higher public investment for modernization and infrastructure.

While public debt remains manageable, a pro-cyclical stance could reduce policy buffers and reverse recent improvements in investor perception. It could also heighten inflationary pressures due to elevated capacity utilization, tight labor markets, and rapid wage growth. Without tighter fiscal settings and improved policy coordination, inflation could stay high, monetary policy may tighten, and external imbalances could widen, the center stated.