By Shakeh Avoyan
Armenia’s economic growth, which hit a record-high rate of more than 12 percent last year, will continue unabated this year provided that the country avoids instability, according to the Armenian Central Bank.
The bank’s annual macroeconomic forecast, unveiled by its chairman Tigran Sarkisian on Friday, envisages that the growth rate will reach at least 6 percent in 2003. Sarkisian said it could be twice as higher if Armenia remains on the path of “political stability” and economic liberalization.
Speaking at a news conference, he said the authorities’ continuing tight fiscal and monetary policies mean that consumer price inflation will again not exceed the 3 percent annual limit set by the Central Bank and Western financial institution.
Armenia’s macroeconomic performance in 2002, praised by the International Monetary Fund, figures prominently in the pre-election discourse of President Robert Kocharian. He argues that most Armenians will be considerably better off after a few more years of such growth.
However, Kocharian’s political opponents regularly challenge the official statistics, saying that the plight of most ordinary people has hardly improved in the last five years.
In a report late last year scrutinizing the transition economies of Eastern Europe and the former USSR, the European Bank for Reconstruction and Development noted that Armenia’s manufacturing sector is outperforming the rest of the economy for the first in several years. But it cautioned that “the recovery remains narrow and is based on growth in a relatively small number of firms.”
“The reasons for this narrow output base are the small size of the domestic market, which does not allow firms to export economies of scale, the difficult investment climate…and the slow progress in enterprise restructuring, which means much of the existing capacity remains idle,” the EBRD report said.