ECONOMIST: ARMENIAN ECONOMY MAY STRENGTHEN ITS CAPACITY AS RESULT OF GLOBAL CRISIS

Noyan Tapan
Oct 28, 2008

YEREVAN, October 28. /ARKA/. Armenian economy will face certain decline
because of global financial crisis, but strengthen its economic
system, Russian-Armenian Slavonic University (Slavonic) University
Deputy Rector Edward Sandoyan said in Novosti International Press
Centre on Tuesday.

He said that flows of outside transfers and investments may reduce a
great deal. Foreign investments in housing are likely to cease flowing
to Armenia for a short term. In his opinion, foreign currency inflow
will shrink by $1 to 1.5 billion.

According to the report of the Central Bank of Armenia, $1,035.3
million has come to Armenia through the country’s banking system over
the period between January and August for non-commercial purposes.

Sandoyan also said that export problems might emerge because of
decrease in ore prices.

Along with that, the population’s paying capacity will reduce, since
foreign transfers are the only income source for 35% of Armenian
citizens.

The economic analyst thinks these factors can slow down economic
growth, which has been double-digit since 2002.

He said 13.7% economic growth was recorded in 2002, and is expected
to be recorded at 10% in 2008.

Sandoyan said that at the next stage, these processes may strengthen
foreign currency in the country, if the Central Bank refrains from
"interfering and making mistakes".

"The Central Bank, continuing its struggle against inflation, can fail
to notice than the time is come for forming additional liquidity on
market", he said adding that "if everything is done properly, things
will run in due course".

"Eventually, foreign currency will strengthen on Armenian market,
and this will lay favorable ground for restoring many export areas’
capacity", the economist said.

The dollar has weakened 16.31% against Armenian dram over 2007. It
sank from AMD 362.5=$1 to AMD 304.22=$1.