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Deputy PM Questions Armenian Growth Forecast


Armenia - Finance Minister Vache Gabrielian at a news conference in Yerevan, 24Dec2012.

Armenia - Finance Minister Vache Gabrielian at a news conference in Yerevan, 24Dec2012.

Economic growth in Armenia will fall short this year of a 4.1 percent target set by the government, Deputy Prime Minister Vache Gabrielian said on Tuesday, contradictinga more upbeat forecast made by Prime Minister Hovik Abrahamian.

“I expect slower growth,” Gabrielian told RFE/RL’s Armenian service (Azatutyun.am). “But it’s my personal expectation. It will be possible to come up with official projections a bit later, when we have more detailed data.”

Abrahamian insisted as recently as on August 31 that his government is on track to meet the ambitious growth target set in the 2015 state budget. He said that the Armenian economy expanded by 4.4 percent in the first half of the year contrary to pessimistic expectations of international lending institutions.

Finance Minister Gagik Khachatrian offered, however, a far more pessimistic outlook when he spoke in the Armenian parliament the following day. “Notwithstanding statistical data, economic developments are worrisome,” he said. “We have decreases in virtually all sectors. There are many uncertainties and we don’t know in which direction the economy will go.”

According to the National Statistical Service (NSS), first-half growth was driven by sizable production increases in manufacturing and especially agriculture. But those gains contrasted with a 4.7 percent drop in retail trade registered in the same period. Armenia’s first-half imports were down by as much as 27 percent. This has led some Armenian economic analysts to question the credibility of the official growth figure.

Hakob Avagian, head of an association uniting small and medium-sized enterprises, added his voice to the skepticism, saying that few of those businesses are seeing real signs of growth. “About 60 percent of small firms are engaged in trade and trade volumes are down substantially,” he said. “So the small businesses have been hit directly.”

In June, the World Bank forecast a full-year growth rate of only 0.8 percent, while the IMF said that Armenia will likely post zero growth in 2015 due to spillover effects of a recession in Russia.

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