CBA CALCULATES COMPOSITE ECONOMIC INDICES OF FIRST QUARTER OF 2008

Noyan Tapan
March 18, 2008

YEREVAN, MARCH 18, NOYAN TAPAN. The Central Bank of Armenia (CBA)
has calculated the composite indices of the Armenian economy of
the first quarter of 2008. According to the CBA press service,
the business environment index of this period made 107.8% on the
previous quarter and 87.4% on the same quarter of last year. The
economic activity index made 120.6% and 99.1% respectively, while
the consumer confidence index made 110.3% and 99.1% respectively.

The CBA has calculated composite economic indices since early 2005. In
order to calculate the indices of the first quarter of 2008, the
CBA studied 845 organizations in industry, construction and service
sectors by a selective principle. 1,789 households in Yerevan and
all the marzes were surveyed as well. The surveys were conducted by
the Internet, phone, and letters.

The business environment index was calculated by averaging the
organizations’s estimates concerning risks and changes in the overall
economic situation, the economic activity index was calculated by
averaging the organizations’ expectations concerning output, demand
for products and services and their stocks. The consumer confidence
index was calculated by averaging the estimates concerning households’
incomes, domestic expenses, employment and the current economic
conditions.

The questions were of qualitative character: the answer choices were
"grew", "remained unchanged" and "declined". Based on these answers,
the share of each version in the total number of answers is calculated,
then the percentage of positive answers is added to half the percentage
of neutral answers and the balances of answers are obtained. The
values of these balances range from 0 to 100. The value over 50
shows a positive tendency of the observed phenomenon, that below 50 –
a negative tendency, while 50 means an unchanged situation.