President Serzh Sarkisian has praised Armenia’s macroeconomic performance in 2015, arguing that the domestic economy has continued to grow and the national currency has only slightly depreciated over the past year despite adverse external influences.
“The key indicators of economic developments in the first eleven months of 2015 suggest that thanks to our efforts we have succeeded in making our country’s economic environment practically immune to major shocks resulting from negative trends coming from the outside world,” he told leading Armenian businesspeople at a year-end reception hosted late on Wednesday.
Sarkisian argued that the Armenian economy is on course to expand by more than 3 percent this year on the back of major production gains in agriculture and manufacturing, contrary to gloomy forecasts made by international lending institutions this spring. He said the growth has helped to push up the average monthly salary in the country by 8.5 percent to roughly 185,000 drams ($385). Year-on-year inflation stood at less than 2 percent in November, he stressed.
Sarkisian went on to note the relatively stable exchange rate of the Armenian dram. The national currency weakened by 17 percent against the U.S. dollar in November-December 2014 amid a sharp fall in dollar-denominated remittances from Armenian migrant workers in Russia. The dram has only slightly depreciated since January despite a continued fall in oil prices that plunged the Russian economy into recession.
“Of course, many countries would be happy to have such indicators, but our figures are not high in absolute terms and we therefore cannot be satisfied with them,” cautioned the president. “Armenia needs faster, long-term and sustainable growth that would not be vulnerable to negative external factors.”
Citing the economic situation in Russia, Armenia’s leading trading partner, the International Monetary and the World Bank said early this year that the Armenian economy will barely grow or may even contract in 2015. Both institutions revised their projections upwards in the following months.
The head of the World Bank office in Yerevan, Laura Bailey, said on Wednesday that Armenia’s Gross Domestic Product will increase by at least 3.2 percent in real terms in 2015. She forecast that growth will slow down to 2.2 percent in 2016.
The Armenian government set the same growth target in its 2016 budget proposal approved by the parliament two weeks ago. It says that that the slower growth will translate into a slight drop in state revenue next year. And although government spending is projected to rise by over 5 percent next year the state budget does not envisage increases in public sector salaries, pensions and poverty benefits.
Prime Minister Hovik Abrahamian admitted last month that the socioeconomic situation in Armenia is unlikely to markedly improve next year. “In view of tense geopolitical developments, promising an immediate betterment of all aspects of social welfare would be a populistic but not honest approach,” he told lawmakers in Yerevan.
Opposition politicians and other critics of the government say that economic conditions have actually worsened this year despite the official growth figures. In particular, they point to a 7 percent drop in retail and wholesale trade recorded by the National Statistical Service (NSS) in January-November.
This explains why imports of goods to Armenia plummeted by over 26 percent in the same period. The NSS also reported a nearly 5 percent fall in Armenian exports. That was mainly attributable to the collapse of the Russian ruble and decreased international prices of copper, molybdenum and gold, a key Armenian export.