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Will Armenia reach a 3.2 percent growth in GDP?

October 10,2016 12:38

Economist Vahagn Khachatryan’s forecast is negative

The International Monetary Fund (IMF) has reported optimistic forecasts for Armenia’s economy.  The regular report published by the Fund recently stated that Armenia will close the year of 2016 with a 3.2 percent growth of real gross domestic product (GDP).  Note that with this projection, the IMF has improved the forecast for GDP growth in Armenia for 2016.  Previously, the forecast was 2.25-2.5%.  It should be stated that by the state budget for 2016, Armenia’s GDP growth will amount to 2.2%, and by the World Bank forecast – a 1.9% economic growth is expected in Armenia in 2016 and accelerated to 2.8-2.9% in 2017-2018.

European Bank for Reconstruction and Development (EBRD) forecasts a 2% economic growth for Armenia in 2016.  By the forecast of the Central Bank of Armenia, the GDP growth in 2016 was revised toward the acceleration: from 1.5-2.6% up to 2.7-3.6%, the next revision is expected in November toward the slowdown.  According to the latest statistic data, the economic activity index for January-August 2016 is increased by 2.4% instead of 3.9% in 2015, and this acceleration of growth was mainly spurred by the industrial sector (7%) as well as the services sector (8%).

“Aravot” asked economist Vahagn Khachatryan whether Armenia will “pull up” such paces of economic growth, especially since the newly appointed Prime Minister Karen Karapetyan has sent an “exhortation” to the government to move forward.  Mr. Khachatryan’s answer is negative, “Firstly, the IMF should substantiate which sector will provide such a growth: agriculture, industry, or services.  In any case, there is no such a snapshot, on the contrary, there is a fall.  There will be a further fall than expected because the most important factor that should have promoted was the remittances, regarding which the expectations are also negative as the same International Monetary Fund in Russia has made non-optimistic forecasts.”  Mr. Khachatryan stated that expectations from Russia are not realized, “Perhaps, there are expectations in terms of investments but now, the situation is hopeless.”

To our observation that the new human resources are introduced to the government system, so whether in this case too, they will not be able to ensure the 3.2% forecast by IMF, the economist countered assuring that the human resources are not decisive on this matter, “If it were the issue of human resources, they could have brought a few people with reputation and the problem would be resolved.  The economic problems of Armenia are in the political dimension and are not dependent on the human resources but on one person making a political decision whose name is the RPA leader.

If there is a political decision that the government system is changing, that corruption today is not the major factor of the political or economic system, in this case, there would be expectations without the changes in human resources.  We are living in a market economy and the market would quickly feel it and promote the economic development.  But since there is no such decision, the changes in the human resources do not matter.”

To our observation that Serzh Sargsyan acted pretty drastic, also warning that “no one should take offense”, Mr. Khachatryan responded, “I have not heard such a political stance and drastic statements associated to my question.  Otherwise, if there were changes in the position, we would have felt it at once.”  We mentioned that the Government staff has been renewed and new faces have appeared in the government system, so whether this does not give rise to optimistic expectations, Mr. Khachatryan countered again, “It does not matter.  If you look at the Government in 2008, you would again see new faces and again with hope inspiring prime minister, and what was changed?  This prime minister later became one of the most prominent representatives of the system.”

To our concern that there is a fear that the same scenario will be repeated again, Mr. Khachatryan gave a positive response, “Certainly, it will be repeated.”  Against this background, let us state that by the forecast of the same IMF report, by the economic growth, Armenia will exceed Azerbaijan and fall behind Georgia in the next five years.

Tatev HARUTYUNYAN

“Aravot”

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