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Armenian Growth Further Dragged Down By Agriculture


Armenia -- A strawberry crop in the Armavir region damaged by hail, 20 May 2010.

Armenia -- A strawberry crop in the Armavir region damaged by hail, 20 May 2010.

Armenia’s economic recovery slowed further last month due to a sharp fall in agricultural production mainly resulting from poor fruit and vegetable yields, the latest official statistics show.


According to the National Statistical Service (NSS), the Armenian economy grew by 4 percent in the first seven months of this year, down from 6.7 percent registered in the first half. Year-on-year growth had accelerated from January through May on the back of rising international metal prices and remittances inflows from Armenians working abroad.

A 23 percent year-on-year slump in agricultural output, which generated almost 12 percent of the country’s Gross Domestic Product in January-July 2010, was instrumental in the growth slowdown. It in turn was caused by last spring’s unfavorable weather conditions. Heavy rain and hailstorms caused serious damage to farmers across Armenia, dramatically pushing up the cost of fruits and vegetables.

Still, bad weather does not seem to have seriously affected other key crops such as grain and grapes. Government officials and some agriculture experts expect a double-digit rise in the grape harvest this fall. The overall agriculture sector’s performance should therefore improve in the coming months.

Industry remained the main driving force of Armenian growth, expanding by 11.4 percent and accounting for over 27 percent of GDP in January-July. Much of that growth was generated by its export-oriented mining and metallurgy sectors.

By contrast, the NSS recorded zero growth in construction and retail trade. Output in other services was up by 6 percent in the seven-month period.

The Armenian government and Central Bank have repeatedly revised upwards their full-year growth forecasts in recent months. Government officials have said it will come in at between 5 and 7 percent. The International Monetary Fund, for its part, has forecast a growth rate of more than 4 percent.

Bagrat Asatrian, a former Central Bank governor critical of the Armenian authorities, on Monday blamed the government and its “ineffective” economic policy for the slowing recovery. “We have reached a point where we are up against a wall and have no more possibilities of development if we carry on along this path,” he claimed at a news conference.

Asatrian insisted that the authorities still lack a clear strategy of bringing Armenia out of last year’s recession -- a claim disputed by Vartan Ayvazian, the chairman of the parliament committee on economic affairs. “The [government’s] anti-crisis program is working and having an impact,” Ayvazian told journalists.
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