Russia’s deepening economic troubles could drag Armenia into recession this year, a prominent Armenian opposition figure said on Wednesday, dismissing government forecasts of continued growth.
The Armenian government expects the domestic economy to expand by 4 percent this year despite the unfolding recession in Russia, a key trading partner. The International Monetary Fund and World Bank have come up with more modest growth projections: 3.3 percent.
The London-based European Bank for Reconstruction and Development (EBRD), which has invested more than $1 billion in business projects in Armenia over the past two decades, has worsened its outlook for the country and now expects zero growth there in 2015.
Hrant Bagratian, an opposition lawmaker who had served as prime minster from 1993-1996, claimed that even the EBRD projection could prove overly optimistic. “A scenario of zero growth could become the best-case scenario at some point for Armenia,” Bagratian told RFE/RL’s Armenian service (Azatutyun.am).
Bagratian argued that the Russian economy is on course to contract by 3 to 6 percent this year not least because of the collapse in oil prices. He said a recession in Russia will hit Armenian exporters hard and reduce vital remittances from Armenian migrant workers.
The remittances already decreased in real terms in the second half of last year due to the sharp depreciation of the Russian ruble.
Bagratian also asserted that Armenia’s membership in the Russian-led Eurasian Economic Union (EEU), effective from January 2, will not mitigate the knock-on effects of the Russian crisis. Nor will the Armenian government secure any financial assistance from the EEU, he said.
The IMF said late last month that the authorities in Yerevan should offset the negative external factors with more “decisive” economic reforms. “Armenia faces a period of slower growth unless decisive actions are taken,” the fund warned in a statement.