By Emil Danielyan
The Armenian government has tabulated the country’s basic economic indicators for last year that show a record-high growth rate of 13.9 percent but higher-than-expected inflation, Central Bank chairman Tigran Sarkisian said on Wednesday.
The figure falls short of the 15 percent rate forecast by some government officials, including President Robert Kocharian, late last year. Nonetheless, it marked a second consecutive year of double-digit economic growth in Armenia which is still reeling from the post-Soviet slump of the early 1990s. The performance was described as “very good” by a senior World Bank official earlier this month.
In an interview with RFE/RL, Sarkisian was cautious in assessing implications of the latest official statistics, saying that the robust growth needs to continue for several more years if it is to have a tangible impact on living standards.
“It is extremely important for us to ensure that recent years’ economic growth is sustainable,” he said. “That will inevitably mean a rise in the population’s incomes, a solution to social problems and a decrease in social polarization.”
Sarkisian added that sustained growth is contingent on the Armenian government completing “the formation of market infrastructures.” That should involve a radical reform of the country’s banking and insurance sectors, the pension system, and bankruptcy procedures, he said.
“It is necessary to give new impetus and a new pace to the reforms. That is the main prerequisite for our future success. If we fail to carry out those reforms, we will have certain problems related to the GDP growth.”
The government expects the GDP to increase by at least seven percent this year. It will count on a higher growth rate in case of securing additional multimillion-dollar funding from the Lincy Foundation of Armenian-American billionaire Kirk Kerkorian. The charity has spent some $150 million on various construction projects in Armenia over the past two years. Kocharian has admitted that the money added several percentage points to the Armenian growth.
The record-high growth was accompanied by a surge in consumer price inflation that was supposed to be below 3 percent but hit 8.6 percent in 2003. Sarkisian blamed that on last summer’s sharp rise in the price of bread which was followed by other food price hikes. He said the Central Bank will cope with the continuing inflationary pressure by “slightly” reducing the money base -- the amount of cash handled by local commercial banks --- in the first quarter of 2004.