THE IMPACT OF THE CRISIS GROWS
Vasak Tarposhyan

Azat Artsakh Daily
05 Dec 08
Republic of Nagorno Karabakh [NKR]

Export Suffers In The First Place

It is evident that this year Armenia’s economic growth will stop
being two-digit. According to the data of the previous 10 months
it was 9.2%, as compared to the 13,3% of the same period of a year
before. The economic growth became slower in the conditions of the
world financial crisis.

Though at this stage the crisis passed round Armenia’s banking system,
anyhow it is having a greater impact on our economy. In the first place
it is expressed on the foreign-oriented branches. In parallel with
the decrease of demand in the foreign market, non-payments are also
noticed, which will simply lead to the emergence of new difficulties
in the organization of the reproduction sphere.

To mitigate the fall created as a consequence of the economic crisis,
in December the Central Bank reviewed its re-funding interest rates. It
was reduced by 0,5%.

>From the beginning of the year it is the first attempt of reducing the
re-funding interest rates. Before that, to mitigate the impact of the
unprecedented increase of prices in the world goods-markets on the
internal market and not to allow a greater level of price increase,
almost every month the Central Bank raises the re-funding interest
rates: from 4,5% it reached 7,75%.

We should a lso underscore that this way the quantity of money
regulates in the internal market. The decrease of interest rates
assumes devaluation of money, which, being conditioned by the
mitigation of the pressure of foreign price-increase, meanwhile has
positive impact on the economy, as cheaper financial resources are
being involved.

While the government and the Central Bank are taking actions to
mitigate the influence of the world crisis it gradually swallows new
branches of economy.

After mining-industry export-orientated companies are also starting
to face the same problem, for example Vanadsor chemical factory, the
production of which was successfully realized in the foreign markets.

The majority of corundum and carbide, around 95%, was realized
in foreign countries. During the recent times, because of almost
double collapse the company has decided to quit the production of
these stuffs, because in the condition of the existing prices it is
not beneficial. Though by now they have managed to avoid job cuts,
the company has sent 350 employees to an obliged leave.

Because of the fall of prices in the international market more than 300
employees were sent to an obliged leave in Alaverdy copper-reprocessing
factory.

The companies engaged in the export sphere have already collided with
the problem of non–payment, which will also lead to the reduction
of volumes. The entrepreneurs can’t get their money on time for the
exported goods, which makes difficult the organization of re-production
and creates lack of financial means.

Gradually the production of drinks is appearing in the same
situation. This product is mainly exported to Russia, where as we
know financial crisis is profound and has already had a very strong
influence.

New companies are emerging in the sphere of information technologies
that have direct connection with the foreign markets, which due to
the absence of order either don’t work or have appeared in obliged
leave. This sphere, which is striking for the high salaries, has
started job cuts.

These tendencies have serious grounds to become more profound in
the different spheres of economy, which can lead to social tension,
if they don’t take actions to create new working places. Especially
because the crisis firstly has a bearing on macro entrepreneurs,
with lots of employees.

Around 8 thousand people work only in four factories of the sphere
of mining industry, which due to more than dual fall of the prices
of copper and molybdenum have appeared in a critical situation.

The existing economic situation has direct influence on export. Only
in October the export has reduced by 15%.

There is a reduction of demand in the internal market as well. If
in the beginning of the year, even in the conditions of the abrupt
price-rise the import in Armenia increased by 20-30%, at the moment the
grow th has stopped. In October the import almost didn’t increase. And
this is in case when every year beginning from that month the importers
are getting prepared for New Year trade and they import big amount
of goods.

From: Emil Lazarian | Ararat NewsPress