RAPID ARMENIAN GDP GROWTH MODERATES SOMEWHAT IN OCTOBER
by Venla Sipila

World Markets Research Centre
Global Insight
Nov 24 2008

According to newest national accounts figures from the Armenian
National Statistical Service, the country’s GDP grew by 9.2%
year-on-year (y/y) in January-October, ARMINO News reports. Compared to
an annual growth rate of 10.3% y/y over January-September, this result
signals some easing of growth in October. Indeed, monthly comparison
shows a contraction of 8.3% in output in October, following growth of
2.1% month-on-month (m/m) in September. Furthermore, it was reported
that output of services (excluding trade) increased by a strong rate
of 13.3% y/y over the first 10 months of the year, while retail trade
increased by 7.9% y/y. Meanwhile, construction increased by 6.9% y/y in
January-October, but contracted by 41% over October alone. Electricity
supply gained 5.8% y/y over the first 10 months of the year, while
industrial growth was reported at a very strong rate of 19.8% y/y.

Significance: After growing at double-digit rates for the past
several years, the Armenian economy finally looks set to cool. The
global financial crisis will not have any notable direct impact on
Armenia, due to the still-undeveloped and relatively isolated nature
of its financial sector. However, indirect negative effects from the
international crisis will likely be felt as moderating current transfer
inflows. Then again, this will allay concerns over the potential
for overheating. Indeed, inflation should moderate in the near term,
while easing domestic demand will have a suppressing effect on imports.