Armenia’s economy insufficiently diversified, PM admits

A joint OECD and FAO report forecast that food prices will be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuel.

The first difficulty that Armenia encountered in the post crisis period is the insufficiently diversified economy, according to Prime Minister Tigran Sargsyan. “Reacting on crisis, Armenia focused on three directions: diversification, improvement of infrastructure and business environment,” the PM said in an interview with CNN. “Further we hope to boost business environment and overcome consequences of crisis by means of consecutive efforts directed at implementation of reforms,” he said.

PanARMENIAN.Net - Regarding the export share in GDP, which represented 20% of GDP in 2002, and only 12% to date, the Prime Minister acknowledged that, unfortunately, a trade balance in Armenia still remains negative. “Export promotion is a primary objective for us, and our export is heavily reliant on three areas: mining industry, information and high technologies and tourism,” he said.

Speaking about investments of the Diaspora, Sargsyan said that they are highly estimated as high as 60-70% from GDP. “Of course, investments from the Diaspora came in Armenia not only in the form of foreign direct investments but also as private remittances, which allowed to overcome the effects of the economic contraction,” the Prime Minister said.

Meanwhile, the Central Bank of Armenia confirmed its forecasts regarding 2011 inflation index. “I do not want to sound too optimistic but we will do our utmost to secure inflation level at 5.5%,” CBA chairman Arthur Javadyan said, when presenting the outcomes of 2010 and presenting the Central Bank’s projections for 2011.

According to the forecasts, during the first 6 months of the year inflation will remain at 9%. “In summer, deflation will be registered. Certainly, there are some risks related to natural conditions and sharp increase of global food prices. But we will respond adequately in the framework of our monetary policy,” Javadyan said.

A joint OECD and FAO report forecast that food prices will be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuel.

Although prices will probably fall from high levels reached earlier this year, long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected, the Organization for Economic Cooperation and Development and Food and Agricultural Organization warned.

"A slow growing supply set against expected high demand underlies the projection of high and more volatile agricultural commodity prices," they said in their Agricultural Outlook 2011-2020.

The report forecasts that higher energy prices and limits on land and water resources will constrain increases in yields and overall production, while growing populations and rising incomes in emerging nations such as China and India will sustain strong demand.

Victoria Araratyan / PanARMENIAN News
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