ACCORDING TO FORMER PRIME MINISTER, ECONOMIC CRISIS IN ARMENIA IS OF STRUCTURAL NATURE

Noyan Tapan

Jan 14, 2008

YEREVAN, JANUARY 14, NOYAN TAPAN. The second stage of the economic
crisis to start in Armenia in March-April will result in a sharp
growth of the unemployment, the former prime minister of Armenia,
chairman of "Freedom" party Hrant Bagratian said at the January 14
press conference. He also forecast a rise in the exchange rate of
the dollar, as well as problems in commercial banks.

In his opinion, the Armenian crisis has no relation to the world crisis
and is a result of the disproportion in the economy’s structure. In
Armenia, the crisis will be deeper and last longer. He informed
those present that according to international experts, the dram’s
appreciation is the number one problem in Armenia. H. Bagratian
reminded that the Central Bank of Armenia (CBA) has to control
inflation. In order to rule out a fall in the exchange rate of the
Armenian dram, the CBA is now using the government’s reserve fund
which is running short. The economist considered as dangerous the
fact that 40% of GDP growth is ensured in the construction sector
whose rates have sharply declined.

In the words of H. Bagratian, the global crisis was caused by a
bubbling in the financial market rather than by mortgage crediting. The
U.S. economy actually amounts to 15 trillion dollars, whereas the
financial market – to 500 trillion dollars. This situation formed as a
result of recrediting, which is also done in Armenia. He expressed an
opinion that the endless recrediting by Armenian banks may "blow up" at
first commercial banks, then other banks. The economist also forecast
a third stage of the crisis that will start in Armenia in the summer.