Armenian “economic miracle” 2013

Susanna Petrosyan, Yerevan. Exclusively to Vestnik Kavkaza

2013 was non-profitable for the Armenian economy. The most important goals were not achieved; economic growth ratio forecast in the budget (6.2%) appeared to be only 4.4%. According to some experts, in fact the GDP growth was only 2.5% by the end of the year.

The authorities continue explaining the low economic growth by the world financial crisis. However, experts state that the crisis is mainly worn down; and the leading world economies find themselves in very favorable economic conditions, considering the last 15 years.

The former prime minister Grant Bagratyan points out that the pace of an economic growth in Armenia is threefold lower than the worldwide average level in last 6 years.

The second acute problem of the Armenian economy was inflation growth – 6.1% instead of the forecast ratio of 4%.

Despite all promises by the government that the inflation growth pace wouldn’t exceed the level of an average salary, the National Statistics Service stated that an average annual salary grew by 4.4% in 2013. Therefore, considering the higher growth of cost-of-living prices, a real salary reduced significantly. Experts explain the situation by the increase of gas and electricity power prices in July.

“We should ask the government and Premier why the aspect of increasing gas and electricity prices wasn’t considered in forecasting macroeconomic indices for 2013, even though they knew it would happen. The low GDP level and reduction of salaries confirmed that the government should have paid attention to their drawbacks, rather than talking about achievements,” economist Vaagan Khachatryan, the chairman of the opposition party the Armenian National Congress, says.

Many unsettled problems will automatically migrate in 2014, including reduction of the investment level, the growth foreign debt, unemployment, development of major business at the expense of small and medium enterprises, and monopoly domination. The World Bank published the report headlined “Development of a new economic model of Armenian economic growth: accumulation, competition, and connection” in the end of 2013. According to it, the economy of Armenia remains the most monopolized among economies of the countries of the former USSR. Monopolists own about 20% of Armenian economy; together with oligopolies, monopolies control almost 2/3 of the country’s economy.

One of the most significant consequences of the monopolized economy is impoverishment of the population. According to the NSS, the poverty level of 2012 was 32.4%; “the very poor” were 13.5% of the population; “the extremely poor” – 2.8%. In 2012 the number of the poor was about 980 thousand people. The country where three million people live has a million of the poor, the very poor, and the extremely poor people.

However, despite plenty of unsettled problems in the economy, President Serge Sargsyan doesn’t plan to dismiss the government and the author of the Armenian “economic miracle” Premier Tigran Sarkisyan.

At the same time, the indignation of the population continues growing, while the economy is losing immunity; and as the result “the economic miracle” created by Sarkisyan will fail to resist objective processes.