EBRD TRANSITION REPORT SEES RAPID GROWTH IN ARMENIA
Arka News Agency, Armenia
Dec 12 2006
YEREVAN, December 12. /ARKA/. Fuelled by the rapid expansion of the
construction, service and agricultural sectors Armenia’s economy has
grown by 13.9 per cent in 2005, the EBRD says in its latest Transition
Report. Increased foreign investment, a high inflow of remittances,
strong private consumption and an increase in exports also contributed
the economy’s strong performance.
Construction, services and investments driven by remittances and
bilateral grants will help to maintain Armenia’s economic momentum in
the short term, the EBRD expects. However, a combination of continued
currency appreciation and high energy prices that led to strengthened
inflationary pressures pose a significant risk in the medium term.
As the EBRD’s latest Transition Report finds, economic growth
across countries from central Europe to central Asia is being driven
increasingly by domestic consumption.
The Commonwealth of Independent States (CIS) and Mongolia grew fastest
at 6.6 per cent in 2005.
Georgia saw its economy grow by 9.3 per cent in 2005 due to a healthy
performance of the financial sector, increase in exports in 2005,
improved external debt position and increased budget revenues,
partially due to large-scale privatisations.
Within the Caucasus, Azerbaijan has become one of the world’s fastest
growing economies with growth of over 26 per cent due to the expansion
of its oil sector with the opening of the Baku-Tbilisi-Ceyhan pipeline
this year. Armenia and Georgia on the other hand, countries which
do not have significant energy resources, have benefited from robust
private consumption, rapid credit growth and strong remittance flows.
In Russia, growth is estimated to have reached 6.4 per cent in 2005
(7.1 per cent in 2004, projected 6.5 per cent in 2006). Foreign
investment into Russia has grown, as has outward investment from
Russia into other countries as Russian companies look for business
opportunities abroad. A major challenge for Russia, as well as other
commodity-rich countries, is to continue the diversification of their
economies, and not become overly dependent on high commodity prices
for growth.
In south-eastern Europe (SEE), a revival of some industries, such as
the metals sector, expanding exports, and strong domestic demand,
fuelled by credit growth, contributed to growth of 4.7 per cent in
2005, down from 6.9 per cent in 2004 mainly due to a slowdown in the
region’s largest economy, Romania.
In central eastern Europe and the Baltic states (CEB), low interest
rates and financial service innovations such as mortgage lending
promoted strong domestic demand and export growth that saw the region
grow by 4.7 per cent. Growth fell from 5.2 per cent in 2004, mainly
due to a slow down in Poland.
The Transition Report 2006 provides a detailed assessment of progress
in transition, combining both region-wide and country-by-country
analysis of the reform process. It also provides an account of
macroeconomic performance and looks at the region’s prospects. The
series of Transition Reports began in 1994 and provide a valuable
record of the historic political and economic reforms in CEE and the
CIS and their impact on economic performance.
The EBRD, owned by 60 countries and two intergovernmental institutions,
aims to foster the transition from centrally planned to market
economies in central and eastern Europe and central Asia.