Weakening economic growth in Russia, which could be aggravated by Western sanctions, will have negative consequences for Armenia, Hrant Bagratian, a prominent opposition politician and economist, said on Tuesday.
Bagratian, who had served as prime minister from 1993-1996, claimed that Armenian growth looks set to further slow down this year of because of spillover effects of looming recession in Russia.
The Russian economy grew by a modest 1.4 percent last year, down from 4.5 percent in 2010. It was projected to expand at a similar rate this year before Moscow’s military intervention in Ukraine strongly condemned by Western powers. Some Russian analysts expect the economy to enter into recession already in the second quarter of 2014 .
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“The Russian economy is not in good shape,” Bagratian said in an interview with RFE/RL’s Armenian service (Azatutyun.am). He said the Russian slowdown will affect Armenia’s macroeconomic performance because Russia accounts for around one-quarter of Armenian foreign trade and is the main source of vital remittances sent home by hundreds of thousands of Armenian migrant workers.
“Last year, they [the authorities] promised to make the Armenian economy grow by 7 percent but it grew by 3.5 percent. Even that figure is very dubious,” Bagratian said. He forecast an even lower growth rate for 2014.
The Armenian government has already acknowledged the possible spillover effects of the Ukraine crisis on the domestic economy. “Any weakening of the Russian economy would certainly be bad for the Armenian economy, ” Economy Minister Vahram Avanesian said last week.
Avanesian also made clear that despite the uncertain outlook for Russia, Armenia will not reconsider its plans to join the Russian-led Customs Union within the next few months.
Bagratian claimed that membership of the trade bloc will only compound economic problems in the country. “As a result of joining the Customs Union and giving up European integration, our export capacity will be limited,” he said. “Exports to the Customs Union will have a chance to rise but we will have serious limitations in Europe because we will have to enforce Customs Union duties that are much higher than the import duties set by the European Union.”