Western economic sanctions imposed on Russia could have growing spillover effects on the Armenian economy unless they are lifted soon, Economy Minister Karen Chshmaritian warned on Wednesday.
“The sanctions may become more sensitive in terms of their impact [on Armenia] if they are not reversed,” he said. “We all should hope that these issues will be settled.”
The Russian economy is currently inching towards recession due, in large measure, to the sanctions imposed by the United States and the European Union because of Moscow’s role in the bloody conflict in Ukraine. Vital remittances sent home by hundreds of thousands of Armenian workers in Russia have already decreased in the last few months as a result.
The World Bank and the International Monetary Fund (IMF) say this is a key factor behind slowing economic growth in Armenia. The two Washington-based institutions now expect the country’s economy to grow by roughly 2.6 percent this year.
According to Chshmaritian, the Armenian government is in no rush to revise downward its 4 percent growth projection for 2014. “There may be grounds [for doing that] but it’s still hard to make forecasts for the next three months,” the minister told a news conference.
Armenian growth is also likely to be slower than anticipated in 2015 and the following years despite government assurances that Armenia’s accession to the Russian-led Eurasian Economic Union (EEU) will brighten its economic prospects. A senior World Bank official cautioned earlier this month that EEU membership alone would not speed up the country’s economic development and should be complemented by closer ties with the European Union.
“We are going to deepen our economic cooperation with EU member states,” said Chshmaritian. He said Armenian and EU officials will open talks early next month on a new “format” of that cooperation which would not contradict Armenia’s membership in the bloc comprising Russia, Belarus and Kazakhstan.
The EU remained Armenia’s leading trading partner in the first half of this year with a 28 percent share in its foreign trade.