By Emil DanielyanArmenia’s has made “remarkable” economic progress in recent years but can not realize its potential in full without open borders with Turkey and Azerbaijan, according to extensive research conducted by economists from the International Monetary Fund.
“Despite geographical isolation, trade blockades, and occasional political upheaval, Armenia’s economic performance during the past four years has been remarkable,” they write in a 100-page research paper presented in Yerevan on Tuesday. “Growth has averaged nearly 12 percent and poverty has fallen. The country has become a reform leader among CIS countries.”
The authors of the study led by Enrique Gelbard, a senior IMF official, attribute the growth to the macroeconomic policies of the Armenian authorities, their “minimal intervention” in economic activity as well as substantial cash remittances from Armenians working abroad. They believe that it has reduced poverty in Armenia and put it on track to be “one of the few low-income countries to achieve the [UN] Millennium Development Goals within the next 10 years.”
“In coming years, economic growth and capital formation should be broad-based and generate employment,” reads the study, predicting an annual growth rate of at least 6 percent from 2006 through 2010.
But the paper, which reflects the IMF’s largely positive assessment of the Armenian government’s economic track record, also warns of significant risks lying head. Its says the country’s long-term development prospects hinge on improved tax collection, increased public spending and regional integration hampered by the unresolved Nagorno-Karabakh conflict.
“Armenia’s economic potential lies with an export-led development growth process, and further integration with its neighbors and main trading partners should be a priority,” say the IMF economists. “Such potential will only be realized when the artificial barriers to regional integration are removed.”
The study specifically notes “extremely positive” benefits of reopening the Turkish-Armenian border. “The proximity of the large Turkish market and Armenia’s lower wages would provide incentives for new investments and the development of new export activities,” it says. “The impact on import prices would also be significant.”
(Photolur photo: A newly renovated alimunum foil plant in Yerevan.)