The International Monetary Fund said on Friday that it is revising downwards its most recent growth projection for Armenia which was already less upbeat than the economic outlook offered by the Armenian government.
Teresa Daban Sanchez, the IMF’s resident representative in Yerevan, said growth in the country will fall short this year of 4.3 percent forecast by the fund last month primarily due to worsening conditions in Russia. “The macroeconomic situation remains favorable but growth is a concern,” she told RFE/RL’s Armenian service (Azatutyun.am).
The recently reshuffled government forecast a growth rate of 5 percent in its policy program approved by the Armenian parliament on Thursday. Some of its members have admitted, however, that Russia’s worse-than-expected economic performance would call this target into question.
The IMF expects the Russian economy to have zero growth in 2014 not least because of Western economic sanctions imposed on Moscow amid the crisis in neighboring Ukraine. Analysts say this will have spillover effects on Armenia given the fact that Russia is its single largest trading partner and the principal sources of vital remittances from Armenian migrant workers.
“All the factors are pointing in that direction,” said Daban Sanchez. She argued that the Armenian economy grew by an estimated 3.6 percent in the first four months of this year.
Daban Sanchez said growth could have been faster had the Armenian authorities implemented all of the reforms agreed with the IMF. She did not elaborate.
The IMF and the World Bank have long been saying that an improved business environment is critical for Armenia’s sustainable development. Large-scale loans extended by them to the authorities in Yerevan have been conditional on corresponding reforms.
The IMF official said that while the authorities have made “some progress” in breaking up de facto economic monopolies the Armenian economy is still “highly centralized.”