The Central Bank of Armenia expects the country’s economic growth this year to make only a tenth of the government target, a recent report shows.
The Bank’s “Inflation Report” released on February 20 evaluates the potential of Armenia’s economic growth in 2015 at only 0.4-2 percent. Meanwhile, the government plans to ensure that the Armenian economy expands by 4.1 percent by the end of the year.
According to the Central Bank forecasts, this year will also see a decline in consumption, while remittances will decrease by approximately 30 percent. Private remittances to Armenia already fell by 7.7 percent in 2014 as compared to the previous year, which had a negative effect on the currency market and partly accounted for the weakening of the Armenian dram.
Economists believe that a further decline in private remittances may have an ever greater negative impact on the country’s financial system as most of the country’s hard currency is provided through such transfers.
While Armenian exports in 2014 totaled a little more than $1.5 billion, the total volume of remittances stood at over $2.1 billion.
“The data of the Central Bank are, in fact, quite optimistic,” said economist Vahagn Khachatrian, who is affiliated with the opposition Armenian National Congress. “Indeed, Armenia is in crisis, and we may even fail to ensure that our growth is flat, because what is happening in Armenia today is not reassuring for the economy.”
According to the economist, the current economic policies will only result in the increase in the number of poor people in Armenia and by the end of the year the country may have a 40-percent poverty level.
“People who stand close to the government accumulate money, but, unfortunately, they do so not due to the economic growth, but at the expense of the people who grow poorer.”
According to the National Statistical Service, in January of this year exports and imports fell sharply in Armenia. As compared with January 2014, exports decreased by 22 percent, while imports fell by a third. These are the worst figures since 2010.
In January, as compared with the same period last year, the volume of domestic trade also reduced by 7.4 percent.
Despite this data, head of the parliamentary standing committee on financial-credit and budgetary affairs Gagik Minasian said that the government is not going to review its economic growth targets.
“I think that the targets set in our state budget are realistic,” stressed Minasian, who represents the ruling Republican Party of Armenia.
According to him, Armenia’s economy is currently experiencing knock-on effects of the Western sanctions imposed on Russia. But, Minasian added, after the latest agreements on Ukraine where a ceasefire was recently reached through international mediation between the central government and separatists in eastern parts of the country there is a chance that these sanctions will be lifted, which will have a positive impact on the Russian economy, and, consequently, on the economy of Armenia.
“Anyway, I believe that the target provided by the state budget will be met,” the Armenian lawmaker said.