Susanna Petrosyan, Yerevan. Exclusively for Vestnik Kavkaza
Negative tendencies continue developing in the Armenian economy – a decrease in trade turnover, a reduction in investments, a reduction in transfer volumes, a growth in prices and the unemployment rate. For the first time for many years international financial organizations are making pessimistic forecasts for economic growth. The head of the IMF mission in Armenia, Mark Horton, stated that the IMF had worsened its forecast on the economic growth of Armenia to 0 percent (earlier the IMF predicted 4.5-5%). Other respectable international financial institutions also worsened their forecasts for Armenian economic growth: the Asian Development Bank – to 1.6 percent; the European Bank for Reconstruction and Development – to 0 percent.
The Central Bank of Armenia evaluates the pace of economic growth in 2015 within the limits of 0.4-2 percent; the state budget requires 4.1 percent economic growth in 2015.
According to experts, the economic recession is predetermined by the expected recession in the Russian economy, a reduction of money transfers from abroad to Armenia, a decrease in exporting, copper and molly world prices falling, as the metals are exported from Armenia. The IMF suggests the government should adapt monetary policy to the complicated economic conditions, i.e. they should correct the economic growth in the state budget (4.1 percent) and reconsider a growth in revenues from taxes.
The Minister of the Economy, Karen Chshmarityan, reported that in the very near future the government would reconsider the economic growth index. It is unclear whether the measure will help the Armenian economy, which remains in deep stagnation, considering the huge foreign debt.
According to the former prime minister, Grant Bagratyan, given influences on the economy by foreign factors and internal problems, zero growth of GDP could be considered a positive scenario. “It is more probable that this year we will have economic recession,” the former premier says. The former head of the Central Bank, Bagrat Asatryan, has a similar view. According to his forecasts, the economic recession could be 10-12 percent in 2015.
Along with corruption and unequal conditions in the business sphere, experts cite the growing deficit of the state budget among the factors which negatively influence the economy. According to some information, in the first two months of the year the budget lost about 8 billion drams ($1=477 drams).
Speaking about the reduction of the state budget revenues, special attention should be paid to trade turnover. The National Statistics Service reports that the volume of foreign trade turnover has reduced by 25 percent in the first two months of 2015 in comparison with the same period last year.
Meanwhile, the government has an optimistic view on the situation. Prime Minister Ovik Abramyan is sure that Armenia is still an attractive country for foreign investors. It should be noted that volumes of investments have decreased by more than 40 percent in recent years. Abramyan told journalists few days ago that economic growth would be registered in the second half of the year.
Probably the statement by the prime minister is predetermined by the start of positive dynamic in the Russian economy. However, today it is too early to reach conclusions about the situation in Russia. Moreover, the current economic problems in Armenia are based not only on the Russian factor; while the government hasn’t suggested or discussed a program of steps on improvement of the economic growth yet, despite the difficult situation. The banking system of Armenia proves this. There aren't and won’t be positive changes in it in the near future. Along with high interest rates (15-16 percent), banks prefer not to issue loans in drams, due to the instability of the dram. According to an economist, Vaagan Khachatryan, the banking system of Armenia doesn’t encourage attraction of investments. The problem is not only in attraction of foreign investments, but also in establishing necessary conditions for attraction of internal ones.
At the moment Armenia has no resources for providing the economic growth. The situation is characterized by a decrease of exporting and importing, instability of the dram, the growth foreign debt, a starting crisis in the management system of the energy sphere. The complex of problems means a deep crisis in the Armenian economy and a demand for serious changes, but it seems the authorities are not ready for them, given their optimistic statements.
