The Armenian authorities should do more to minimize the fallout from Russia’s deepening economic troubles as well as sluggish growth in the European Union, President Serzh Sarkisian said on Friday.
Sarkisian also insisted that Armenia will reap major economic benefits from its membership in the Eurasian Economic Union (EEU) even now that the Russian economy is plunging into recession.
“It is evident that Armenia cannot buck the current trend and that what is happening in the global economy should also reflect on our country and our economic indicators. Nevertheless, Armenia’s government and Central Bank should step up their efforts to mitigate negative influences on our economy coming from the outside world and to smoothly carry out necessary adjustments,” he said in a speech at an annual conference of the country’s largest business association.
Sarkisian did not specify just what the authorities should do offset the spillover effects of the worsening economic situation in Russia. The Armenian economy is on course to grow more slowly this year than was expected. The Armenian dram has weakened by over 6 percent against the U.S. dollar and other major currencies over the past month amid falling remittances from scores of Armenians working in Russia.
Sarkisian dismissed suggestions that the dram’s depreciation is connected with Armenia’s forthcoming accession to the Russian-led EEU. He argued that neighboring Georgia’s national currency has also weakened considerably in recent months.
“Why is there currency depreciation in Georgia? A Georgia which has signed a free trade agreement [with the EU.] Why are there currency depreciations in other countries?” he told hundreds of businesspeople affiliated with the Union of Industrialists and Entrepreneurs.
Armenian critics of EEU membership argue that Russia and the two other members of the bloc, Belarus and Kazakhstan, account for less than a quarter of Armenia’s foreign trade. They also say that the unfolding Russian economic crisis will make potential benefits of that membership even more elusive.
Sarkisian claimed the opposite, however, saying that the vast EEU market will ease the main “objective constraint” to greater foreign investment in Armenia: the small size of the domestic economy. “I am confident that with our accession to the Eurasian Economic Union this problem is becoming solvable because Armenia will be part of the EEU economic area and that will give investors more incentives to invest in our country,” he said.