Manufacturing, information technology and infrastructure projects will increasingly replace agriculture and especially construction as the main driving forces of economic growth in Armenia, Prime Minister Tigran Sarkisian declared on Thursday.
Chairing his last cabinet session of 2010, Sarkisian again described the need for economic diversification as the main lesson learned by the Armenian government from the global financial crisis.
“Economic growth is no longer ensured not by construction and agriculture … and industry, modern technologies, the information technology sector will be the main engines of economic development,” he told government ministers.
“The main sectors ensuring growth are industry and infrastructure,” he said. “This will be the main development trend in 2011-2012 as ensuring the diversification of the economy has been the main direction of our anti-crisis program.”
Official statistics show the Armenian economy expanding by 2.6 percent in January-November 2010 on the back of an almost 10 percent rise in industrial output. Growth was also boosted by a 6.6 percent year-on-year rise in services other than retail trade, which was essentially flat during the eleven-month period.
The growth rate was significantly weighed down by a 14.5 percent fall in agricultural production largely resulting from bad weather. A nearly 4 percent contraction of the Armenian construction industry was also a major factor.
The industry sector was primarily boosted by rallying international prices for copper and other non-ferrous metals, Armenia’s number one export item. Government critics cite this fact to contend that the government has still a long way to go in diversifying the national economy.
Sarkisian and other top government officials have repeatedly called such diversification a top economic priority. They acknowledge that Armenia had grown too dependent on construction in the years leading up to the global recession, when its economic growth averaged more than 10 percent per annum.
Former President Robert Kocharian, who presided over the double-digit growth, strongly disagreed with this widely held belief in March when he launched a thinly veiled attack on the current Armenian government’s anti-crisis strategy. Kocharian claimed that there is still “huge” domestic demand for apartments and office space and that the authorities could have used it for mitigating the impact of the global recession.
Sarkisian stood by government forecasts that economic growth in the country will accelerate to at least 4.6 percent in 2011. The faster growth will be generated by sectors other than construction and agriculture, he said.
The prime minister described the rapid spread of the Internet in Armenia as one of his government’s main achievements in 2010. “The number of our Internet users doubled,” he said. “It reached 173,000, and if we also include those using the Internet through mobile telephony, the figure exceeds 1.5 million.”
“This means that there is now a more favorable environment for the development of information technology in Armenia in 2011, and that is one of the government’s top priorities,” he added.
Sarkisian also claimed that a series of measures taken by the government since October will “substantially improve the business environment,” something which local and Western economists say is vital for the country’s sustainable development. He argued that the government has simplified cumbersome taxation procedures for businesses and reduced the number of economic activities subject to state licensing.