In 2022, on the one hand, high economic growth (5.6 percentage points higher than the target) was recorded; on the other hand, higher than expected inflation (3 percentage points higher than the forecast). To what extent is this 12.6 percent increase the result of the government’s activity? There are comments that it is primarily an indirect result of the Russian-Ukrainian war; in response to the question, the guest of “Aravot” “Areresum” (“Confrontation”) program, economist “Aprelu Yerkir” party Council member Vahe Vardanyan answered.
“In numerical terms, it is an impressive increase, especially since it is noted that the highest rate was recorded in EAEU countries.
But mostly, the economic growth must be sustainable. In this case, I find no prerequisites for this.” The forecast explained that studying which factors influenced the economic growth rate is necessary. “It is mainly due to the increase in domestic demand, and due to the Russian-Ukrainian conflict, there was an inflow of capital.”
The other guest of the program, Nairi Sargsyan, the Chairman of the Chamber of Auditors, commenting on the fact that the growth of domestic consumption in Armenia increased mainly due to the Russians who arrived in Armenia as a result of the Russian-Ukrainian war, said: “In 2022, 1 million 700 thousand tourists arrived in Armenia, and under the name of tourist are also the relocates who come not for cultural acquaintance, for 3-7 day visits, but even live in Armenia for months.
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More than half of our population is 1 million 700 thousand tourists; naturally, domestic consumption should have increased. But I have to report some negative data, it was said that the economic growth of 12.6 percent is impressive. It is not remarkable at all because, for example, retail trade grew by only 2.6 percent, while I repeat, we have an inflow of 1 million 700 thousand. Wholesale trade increased by about 25 percent, and trade in cars, and vehicles, that is, imports from Western countries with re-export to the Russian Federation, by 49 percent.
The following indicators are from the service sector: a 28 percent increase was recorded, hotels, and public catering facilities, i.e., restaurants, and cafes, dominate. That is directly related to relocations and tourists. Banks have grown quite impressively; I mention that they all are impoverishing factors for RA citizens and the permanent population. In 2022, banks were given an exclusive state function to tax citizens’ money. Only the state has this right. Any transfer from abroad – from relatives, family members, and those who went to work overseas temporarily – was taxed at 2-3.5 percent when cashing the money. In other words, they impoverished the population widely and said that we have economic growth due to the 67 percent growth of banks. Gambling increased. At the expense of 45 percent growth, the economic growth is impressive. And why don’t we talk about the industry…”
Vahe Vardanyan explained: “By impressive, I mean the numerical expression… And I said that we should develop industry and agriculture in the economy so that the share of exportable goods in economic growth is more than the service sector and trade.”
And usually, economic growth with such components, in case of neutralization of the influence of external factors, regularly leads to a deep economic decline. Then he clarified: “Sooner or later, the Russian-Ukrainian conflict will be settled, the resettlement will return, the inflow of capital will decrease or become zero altogether, and our economy will face a severe problem.”
In his speech at the National Assembly, the Prime Minister also addressed this issue. “The debate is about whether you had a 12 percent growth, what does this government have to do with it, as if it fell from the sky? Dear colleagues, you know I have to disappoint, don’t I? Today there is a big construction boom in Armenia; yes, people, how did that boom happen? Were we walking, and suddenly there was another construction boom? It is related to a particular decision of the government.”
Nairi Sargsyan specifically responded: “Nikol Pashinyan is correct to say that he has a role in the economy, but not the positive one he imagined, but this government has a terrible negative role. It is zero if we evaluate the positive part of economic policy on Armenia’s current financial situation. And in the negative aspect, more than half belongs to them. For example, in 2022, when everyone talked about inflation, and people could no longer consume in stores with the same salary, very hasty decisions were made to increase the price of electricity, gas, and water. Naturally, consumers began to consume these services more expensively. In addition, it caused a chain reaction, increased the cost of production, and impacted products and goods. Was it harmful or not?
The entire conversation- in the video
Anna ISRAYELYAN
