Armenia’s economy will likely contract by 12 percent this year and resume positive growth already next year, Prime Minister Tigran Sarkisian said on Wednesday, presenting his government’s latest economic outlook.
The country’s Gross Domestic Product (GDP) shrunk by 16.3 percent in the first half of the year amid a deepening fallout from the global recession. Sarkisian warned last month that its full-year contraction could hit a 20 percent rate.
Sarkisian sounded more optimistic on Wednesday, saying that anti-crisis measures taken by the Armenian government should result in a GDP decrease of 12 percent in 2009. “A recovery cycle will start at the end of the year,” he told journalists during a visit to the southeastern Vayots Dzor region. “This is our tentative forecast.”
The premier said the government also expects the Armenian economy to grow by a modest 1 percent in 2010. “We are going to base the state budget for 2010 on this indicator,” he said.
In an effort to cope with the consequences of the recession, the government has already obtained more than $1 billion in external loans from the International Monetary Fund, the World Bank, the Asian Development Bank and Russia. The money is to be used for financing infrastructure projects, providing cheaper credit to Armenian businesses and maintaining the value of the national currency, the dram.
Sarkisian’s growth forecast for 2009 was essentially endorsed by Bagrat Asatrian, a former governor of the Armenian Central Bank critical of the country’s current leadership. “Frankly, I am also of the opinion that although the first half ended with a decline of 16.3 percent, the rate of contraction will be lower, roughly 12-13 percent, by the end of the year,” he told RFE/RL.
But Asatrian was more skeptical about the country’s macroeconomic performance in 2010. He predicted that economic growth will not resume before 2011 due to a host of domestic and external factors.
Sarkisian, who had succeeded Asatrian as Central Bank governor in 1998, also insisted that Armenian commercial banks will avoid the kind of problems that plagued Western financial corporations late last year. “Our banking system is in a good shape,” he said. “The level of [banks’] capitalization is extremely high. So is their profitability and liquidity.”