World Markets Research Centres
Global Insight
August 22, 2008

July Brings No Easing to Persistently Brisk Armenian GDP Growth

by Venla Sipila

The Armenian economy continues to power on, posting double-digit
growth rates. Indeed, according to the latest figures from the
National Statistical Service quoted by ARMNIFO, the country’s GDP
expanded by 10.6% year-on-year (y/y) over the January-July
period. This result signals some speeding up in annual growth in July,
as the first half had seen GDP rise by 10.3% y/y. In particular,
retail trade increased by 6.1% y/y, while service supply (excluding
domestic trade) soared by 15% y/y and construction output rose by 14%
y/y. Meanwhile, production in the agricultural sector grew by a lower
but still respectable rate of 6.9% y/y. Industrial output rose by 1.8%
y/y for the first seven months of the year, with, specifically,
electricity generation gaining 2.7% y/y. Nevertheless, while remaining
weak in comparison with the other sectors, industrial output revived
over July after contracting by 0.3% y/y in the first half. Measured
month-on-month (m/m), Armenia’s GDP surged by 21.4%, notably boosted
by a strong seasonal boost from agricultural output and solid
construction activity.

Significance:The latest data confirm that this year may see annual
growth reaching double digits once again. However, they also give
further support to concerns over overheating, as continued rapid
growth of domestic demand is contributing to inflation pressures and
deepening the wide trade deficit.