Are Armenia’s macroeconomic indices “drawn”?

PanARMENIAN.Net - International financial and trade structures revise their forecasts one after another. Specifically, the European Bank for Reconstruction and Development (EBRD) revised upward its GDP growth forecasts for Armenia from 4.5% to 4.6%, according to the EBRD economic outlook for Eastern and Central Europe, as well as Central Asia. 4% average growth will be recorded in 2010 in economies of Eastern Europe and Caucasus, what is explained by the “effect of low base” (7.8% decrease was recorded in these countries in 2009). Meanwhile, EBRD forecasts 3.5% average economic growth in 2010 for the entire region (30 countries), after 6.1% drop in 2009 and against 2.5% growth predicted in October. The growth in forecasts is conditioned by stronger indices of four economies of the region – Poland, Turkey, Russia and Kazakhstan – due to increase in prices for raw materials and resumption of capital flows into developing markets. At the same time, the economic recovery will proceed at a slow pace for majority of the region’s countries, which do not export raw materials. Besides, GDP drop is expected in some countries (Hungary and the Baltic countries) in 2011.

Pascal Lamy, director-general of the World Trade Organization (WTO), said that global trade, in volume terms, is expected to grow more than 10% this year. The forecast is up from an estimate of 9.5% in March. "It will probably pick up 10 to 10-plus percent this year depending on what happens in the second half of the year," Lamy said speaking at the UN pavilion at the Shanghai World Expo. Earlier, the International Monetary Fund predicted 5.8% growth in global trade in 2010.

The global tendencies also had an impact on Armenia’s economy - 6.7% GDP growth was recorded by the end of the first half of 2010. Meanwhile, 18% decrease was recorded in Armenia’s economy during the same period of last year. However, Armenian Minister of Finance Tigran Davtyan said on July 23 that the country’s government does not hurry to review its macroeconomic indices. Perhaps, the government does not believe in their irreversibility, as structural changes have not been observed in Armenia’s economy yet. Besides, the country’s population does not trust the monthly “drawn” indices published by the RA National Statistical Service.

Nevertheless, Armenia’s economic growth is reasoned by three basic factors: first, the credits attracted in 2009 yield results; second, sharp increase was recorded in world prices for copper and molybdenum. However, the country’s population does not experience improvements due the increase in prices, as Armenia’s mining field is in the hands of several individuals. And growth in remittances is the third factor that has had an impact on Armenia’s economy.

It should be noted that decrease in export and agricultural volumes was recorded by the end of the first half of 2010. Agriculture is an extinct field in Armenia, as any reforms have not been implemented in this field since 90s. Meanwhile, 0.8% deflation recorded in Armenia's consumer market in June as compared with May causes misunderstanding. Specifically, the prices for fruits and vegetables have not dropped, despite promises of Armenian Minister of Agriculture Gerasim Alaverdyan. In its turn, the Central Bank of Armenia (CBA) is trying to convince that the continuous toughening of monetary and credit conditions, decrease in international prices for raw materials and foodstuffs, gradual cancellation of expanding influence of the monetary and credit, as well as tax and budgetary policy implemented in 2009 have resulted in decrease of 12-month inflation at a higher pace. The CBA believes that the decrease in prices recorded in June is basically conditioned by drop in prices for a range of goods – vegetables, fruits, sugar, egg, petrol and diesel fuel. And this has resulted in 0.8% decrease in prices.

Meanwhile, Armenia’s population continues displaying distrust and adjusting to bad living conditions.