MOODY’S EXAGGERATES ECONOMIC RISKS FOR ARMENIA, A WELL-KNOWN ECONOMIST THINKS

2007-12-04 16:43:00

ArmInfo. "I don’t share the basic conclusions of Moody’s agency on
the economic risks in Armenia in 2008", economist Eduard Aghajanov
said during his talk with ArmInfo correspondent.

According to him, even if USA’s economy devolves into a recession,
no substantial changes in the Armenian population’s incomes may
be observed.

"No more than 10% of transfers to Armenia are from the USA, the
main financial flows come from Russia", the expert emphasized. USA’s
possible economic downturn may not influence the Armenian financial
system either, E. Agajanov assured, emphasizing that the banking
sector of Armenia is not integrated with American financial system. The
economist completely ruled out reduction of transfers from Russia. He
is confident in the ability of the Russian economy to stand the
dramatic drop of prices of energy products.

E. Agajanov motivated his opinion by the fact that RF’s reserve funds
exceeded 460bln USD, and the price of oil is fixed with a plentiful
supply in the 2008 budget-61USD (more than one and a half times
lower than today’s price). At the same time, E. Agajanov considers
the inflation rate predicted by Moody’s for 2008 unreal. "The fact
that Moody’s predicted inflation increase from 4% to 4,5% shows
that the agency’s specialists have a bad idea of Armenia’s economy",
Agajanov thinks.

He noted that in 2003, when the growth in prices of grain and energy
resources was much more moderate, the inflation in Armenia made up 8%.

According to his estimations, by the end of 2007 the real inflation in
the country will total 10%. Agajanov admits the forecast of Moody’s
about decrease of the constructions sector’s share in Armenia’s
economy in 2008.

However, unlike the Moody’s experts, he thinks that such course
of events is natural. "The construction sector in any country is
saturated in a certain period, but there are no grounds to speak of
its instability", the economist said.

The 2% budget deficit, for which the Armenian government was praised
by the Moody’s, causes no positive emotions for Agajanov. "The
superfluously tough financial policy is not a cause for admiration",
he thinks. Agajanov said that even such large economies of the world,
as the German, French and Italian ones cannot restrain the budget
deficit within 3% and one shouldn’t be "a greater Catholic than the
Pope" in this matter.

The only thesis in the Moody’s report that Agajanov shares
unconditionally concerns the necessity of a fight against corruption
and monopolism as a pledge of maintenance of long-term and consistent
economy growth rates.

From: Emil Lazarian | Ararat NewsPress