Pashinian and his economy minister, Vahan Kerobian, predicted further increases in food prices in Armenia, which already soared in 2021. They clearly alluded to knock-on effects of Western economic sanctions imposed on Russia over its invasion of Ukraine.
“As we can see, there have been constant ‘inflationary earthquakes’ for the last two years,” Pashinian said at a weekly session of his cabinet. “The first one was COVID and the second one is geopolitical developments, the events taking place in Ukraine.”
“In this regard, nothing optimistic is expected,” he warned grimly.
Kerobian likewise spoke of a “serious challenge to our food security” anticipated this year.
“We can already see a substantial rise in the cost of wheat and other basic goods and commodities,” he told reporters after the cabinet meeting. “There is a big risk in the sugar market.”
Armenia imports a large part of its wheat and other key foodstuffs from Russia. There are concerns that the Russian government might curb their exports in response to the severe sanctions.
Food prices in Armenia went up by an average of almost 13 percent last year, reflecting a global trend. Government data shows that they continued to rise significantly in January and February this year.
Kerobian said that the further price hikes expected by the Armenian government are an opportunity for domestic farmers. “Farming is going to become more lucrative,” he claimed.
Many farmers across the country have said in recent weeks, however, that they are planning to cultivate less land this year due to a spike in the prices of fertilizers. The government decided on Thursday to subsidize those prices, but with strings attached.
Pashinian already expressed late last week concerns about the adverse impact of the sanctions on Armenia and other members of the Russian-led Eurasian Economic Union. He said they should look into ways of minimizing “these negative effects.”
Russia is Armenia’s number one trading partner. According to official statistics, Russian-Armenian trade rose by almost 21 percent, to $2.6 billion, last year, contributing to renewed economic growth in the South Caucasus country.
Pashinian and other officials did not say on Thursday whether they expect slower growth this year because of the sanctions.