By Emil DanielyanArmenia's Gross Domestic Product set a new record for double-digit expansion in the first half of this year, making its economy one of the fastest growing in the world, according to the latest government statistics.
The data released by the National Statistical Service show the GDP growing by 14.8 percent under a 3.2 percent year-on-year inflation. They indicate that the Armenian economy, still reeling from the Soviet collapse, was greatly helped by a 54.4 percent surge in the volume of construction work during the period in question. Also contributing to the unusually high growth rate was an 18.6 percent rise in industrial output.
Government officials were quick to present the figures as a vindication of their economic policies harshly criticized by the Armenian opposition. They also earned the government more praise from Western lending institutions.
The minister for trade and economic development, Karen Chshmaritian, held a special news conference on Friday, saying that the growth is affecting a growing number of stagnant industries as well as economically depressed regions outside Yerevan. “This is happening mainly due to the development of the private sector and the improvement of the business environment,” he said.
The opposition, which has long accused the authorities of corruption and mismanagement, is bound to reject the upbeat data as a fraud. Critics claim that most Armenians do not feel any major improvement in their lives.
But officials at the World Bank say the first-half official figures appear largely credible. “I don’t believe that they are fundamentally wrong,” the bank’s resident representative in Armenia, Roger Robinson, told RFE/RL.
“The development process in Armenia is going ahead quite well,” Robinson added. “The macroeconomic situation is stable, foreign reserves continue to grow, export growth has been good, and donor support is still strong.”
The optimism seems to be shared by another authoritative Western institution, the International Monetary Fund. A high-level IMF team is currently in Yerevan, assessing the economic situation in the country. The head of the mission, Enrique Gelbard, reportedly commended the Armenian authorities at a meeting with President Robert Kocharian on Wednesday.
Last April the IMF board in Washington released the fourth $14 million installment of the IMF’s $95 million Poverty Reduction and Growth Facility (PRGF) to Armenia, citing its “strong performance” coupled with low inflation and a narrowing budget deficit. The visiting IMF mission will likely recommend more such loans.
The latest figures also put the Armenian government in a better position to secure the equally important second tranche of the World Bank’s $40 million Structural Adjustment Credit (SAC-5) which is due to cover half of its budget deficit this year. Robinson, however, would not specify when the government should expect to get $20 million payment, saying that its release is conditional on “a very large package” of actions meant to reduce corruption, improve the investment climate and amend banking and labor legislation.
The World Bank official stressed that he hopes the government will unveils its promised anti-corruption strategy within the next “three or four months.” The bank provided a $300,000 grant for that purpose in 2001 and a team of government experts has since been working on the document.
“The government would like to have the second tranche before the end of this year,” Robinson said. “If they complete all the actions necessary for it before the end of this year then they’ll get the money before the end of this year.”