Minister Sees ‘Natural’ Economic Slowdown
By Shakeh Avoyan 25/11/2004 13:56

Radio Free Europe, Czech republic
Nov 25 2004

Economic growth in Armenia, which hit a double-digit rate last year,
will slow down in the coming years but will remain strong in relative
terms, Finance and Economy Minister Vartan Khachatrian predicted on
Wednesday.

Khachatrian said the country’s Gross Domestic Product is on course to
expand by up to 11 percent this year and 8 percent in 2005, down from
13 percent reported by the government in 2003. Official figures put
GDP growth in the first nine months of 2004 at 10.3 percent.

“There is a tendency of [growth rate] decrease and that is natural.
The greater the economic base, the slower its further growth,”
Khachatrian told RFE/RL.

“Many countries and organizations hold up Armenia as an example,” he
added. That is especially true for the World Bank and the
International Monetary Fund that have praised the country’s
macroeconomic performance, rewarding its government with more
multimillion-dollar loans. The World Bank described that performance
as “exemplary” in a statement last week.

The key question arising from the rosy macroeconomic data is their
impact on still low living standards. Many local and foreign
economists believe that the growth has mostly benefited a small
number of wealthy Armenians that continue to routinely evade taxes.

But Khachatrian repeated the government view that the benefits are
beginning to trickle down. “The poorest section of the population may
still not be happy but it does feel change,” he claimed.

According to official statistics made available to RFE/RL in
September, the proportion of Armenians living below the official
poverty line fell from 49.7 percent to 42.9 percent in the course of
last year. They also showed the rate of “extreme poverty” tumbling
from 13 percent to 7 percent during the same period.

The credibility of the latter figure, based on household income
surveys by the National Statistical Service, was seriously questioned
on Wednesday by Hranush Kharatian, a prominent sociologists and the
head of a government department on minority affairs. “I think most
experts find this figure extremely suspicious,” she said. “If I’m not
mistaken, even the Finance Ministry has asked for a repeat of that
survey.”

Other experts say that the official poverty line is set too low.