A significantly higher growth target set by President Serzh Sarkisian for the Armenian economy this year is “achievable” but contingent on a host of domestic and external factors, a senior official from the World Bank said on Thursday.
Sarkisian announced on Monday that a GDP growth rate of 7 percent is his “primary expectation” from his government reshuffled as a result of last month’s parliamentary elections.
The government had forecast earlier that the Armenian economy will expand by 4.2 percent in 2012.
The World Bank and the International Monetary Fund (IMF) came up with virtually identical forecasts early this year but subsequently revised them downwards, citing unfavorable global economic trends. In its global economic outlook released last week, the World Bank said economic growth in Armenia will come in at 4.1 percent this year.
Still, the bank’s outgoing director for the South Caucasus, Asad Alam, asserted that the country’s economy can grow faster in principle. “I think the 7 percent growth rate is achievable but it is very based upon what the government is able to do in the remaining parts of the year and also the global economic environment,” he told a news conference in Yerevan.
Alam suggested that growth could accelerate later this year on the back of the agricultural sector, which was largely flat in the first few months of 2012, as well as “significant” infrastructure projects currently implemented by the government.
“So a combination of all of these efforts can get higher growth rates in Armenia,” the World Bank official said. “But a lot also depends upon the government program itself, on the policy changes that are to be implemented.”
According to the National Statistical Service, Armenia’s GDP increased by 4.7 percent in the first quarter, slightly faster than in 2011. In Alam’s words, the World Bank anticipates a higher second-quarter growth figure.
Alam also reaffirmed the World Bank’s view that improving the country’s flawed business environment is essential for sustainable growth. “I think the problem of low competition in the economy is a serious problem and it remains a serious challenge for the Armenian government,” he said.
The World Bank’s managing director, Ngozi Okonjo-Iweala, issued a similar warning when she visited Yerevan in late 2009. She said Armenia cannot attain a higher level of development unless its leadership improves tax administration, creates a “strong and independent judicial system” and combats government corruption in earnest.
Armenian leaders and Prime Minister Tigran Sarkisian in particular claim to have made major progress in addressing these problems. His cabinet’s new five-year policy program calls for a continued fight against domestic “oligopolies.”