WB YEREVAN OFFICE PRESENTS REPORT ‘ARMENIA: ECONOMIC MONITORING NOTE’

ArmInfo
2008-07-16 15:09:00

Wednesday on July 16 WB Yerevan Office presented a report ‘Armenia:
Economic Monitoring Note for the first half of 2008’. The report
outlined marcoeconomic risks in the country.

Mr. Aristomene Varudakis, World Bank Armenia Country Manager said
such reports will be published once in 6 months to provide timely
and brief data on the economic situation for the last 6 months. He
said the report is quite urgent given the new government plans for
economic reforms. The report covers economic policy of Armenia, as
well as the economic structure including the spheres of health care,
education, agriculture, and transport.

Moreover, the report presents the monetary and fiscal policies,
the latest development in the financial sector, as well as
telecommunications, energy, drinking and irrigation water. Structural
problems are often presented not orderly, he said, but they are
important to meet the challenges the country has faced. A. Varudakis
added that the report is useful to the citizens of Armenia including
specialized organizations, students, officials, public organizations
as well as to international structures interested. The report is
published in English and translated into Armenian.

For his part Aghasi Lazarian, WB Yerevan Offuce economist, said that
over the last not full 6 months, GDO kept rapidly growing mostly at
the expense of construction sphere (14.9% growth for 5 months of 2005)
and services (10.6% growth) not subjected to export. Simultaneously,
intensive growth of risks has been observed including rapid growth
of inflation (Jan-Jun – 9.6%) and worsening of unfavorable balance of
trade of Armenia, reduction of export due to the tense situation in the
international market and rise of prices for imported goods. ‘Despite
the 9.8% GDP growth for the 5 months, it is early to make forecasts
for the end of 2008′, he said. He outlined 0.4% decline in industrial
sectors and 1.9% slackening growth in agriculture.

At the same time he added that inflation in Armenia had been chiefly
conditioned by oil and food products’ prices raising in the world
market as well as raising of prices in the sphere of services, which
is conditioned by the high demand because of the transfers coming
to the country (40-50% growth over the first quarter of the current
year). He also said that though influence of the money and credit
policy is reducing because of interventions at the monetary market,
currency demand was big over the five months of the current year and
Central Bank sold $100 mln, which also was a restraining factor. At
the same time he added that over the first 6 months the volume of
the tax revenues has grown by 35,5%, which is higher of the predicted
level. This is conditioned by improvement of the tax administration.

Indicators of the Armenian budget will be better in the current year
because of such rates, he emphasized.

For his part, Artavazd Hakopyan, WB Yerevan Office Executive
Agricultural and Ecological Programs marked the backgrounds of the
sphere growth. In particular, gradual growth in plant cultivation
has been stipulated by planting of gardens 5-6 years ago, as well as
enhancement of efficiency in irrigated zones. Alongside with that, the
risks are aggravated in non-irrigated zones and in cattle breeding
in view of climate changes and animals diseases, in particular,
avian influenza and swine fever in 2007 and 2006. He said that the
government development program increased agricultural subsidies. ‘We
think that other mechanisms of market relations exist, including
implementation of new technologies’, he emphasized.