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Russia-West Standoff ‘Affects Armenian Economy’


Armenia - PM Hovik Abrahamyan visits Armas vine factory in Aragatsotn region, 27 Sept, 2014

Armenia - PM Hovik Abrahamyan visits Armas vine factory in Aragatsotn region, 27 Sept, 2014

Prime Minister Hovik Abrahamian has expressed his concerns about the negative effect of the Russia-West standoff on the Armenian economy, assuming that if sanctions against Moscow continue, the negative impact will be even greater.

During a news briefing on Monday, Abrahamian did not mention figures, but, in fact, did not rule out that the government may fail to live up to its promise to ensure a 4-percent economic growth this year.

“We are doing everything to ensure our economic grows amidst all these processes taking place in the region. But you all know that we also have a negative impact on our economy in conditions of the Russia-West standoff,” he said, adding that a 4-percent expansion of the Armenian economy in such conditions in 2014 would be an “achievement”.

Abrahamian said that the longer the Western sanctions against the Russian economy last, the longer will be the impact of the situation on the Armenian economy.

According to the National Statistical Service of Armenia, in January-September the Gross Domestic Product (GDP) of Armenia has increased by 4.3 percent. But the Central Bank of Armenia does not expect the growth to be sustained till the end of the year, forecasting that annual economic growth will stand at 3.6 percent at best.

International financial institutions are even more pessimistic in their forecasts. About a month ago local representatives of the International Monetary Fund and the World Bank estimated that Armenia’s economic growth in 2014 may not exceed 2.6-2.7 percent, and again, as the main reason they cited the deteriorating economic situation in Russia.

Russia is Armenia’s second largest trading partner after the European Union, but about 85 percent of remittances (data for 2012 and 2013) that are vital for the Armenian economy come from Russia. The Central Bank’s data shows that these transfers are gradually falling. In August, for example, the annual decline made 9 percent (nearly $167 million were wired to Armenia in August 2014 against more than $184 million transferred during August 2013).

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