FURTHER ECONOMIC SITUATION IN ARMENIA WILL DEPEND ON EFFICIENT SPENDING OF BORROWED FUNDS IN REAL SECTOR: AMERIABANK DEVELOPMENT DIRECTOR

ArmInfo
2009-06-23 19:01:00

ArmInfo. Economic decline in Armenia will depend on how effectively the
government will co-lend the borrowed funds to the real sector, Tigran
Jrbashyan, Ameribank Development Director, told media on Tuesday. He
said the government is currently making vital decisions. ‘It will
become clear how effectively the entire mechanism will work in the
period from July to September’, he said.

Nevertheless, he said, 15.7% economic decline for January – May
2009 in Armenia is rather a serious fact. The given situation is the
result of certain disproportion in the economy structure, T. Jrbashyan
said. ‘When economic growth is secured at the expense of one sector,
particularly, the construction sector, this testifies to certain
disproportion in the structure of economy and crisis phenomena in
this sector have much stronger impact on the economic situation than
in the countries with more diversified economy. Russia that depends
on the oil and gas export has occurred in quite similar situation
with disproportional structure of economy’, he said.

The second problem of Armenia’s economy is dependence on transfers,
which are affected by the situation in specific states, and first
of all in Russia, T. Jrbashyan said. The third problem of Armenia is
the geopolitical20situation, growing risks, and cargo traffic. ‘Due
to the measures the Government of Armenia will take, the country may
experience insignificant fall’, he said.

On the other hand, he said, Armenia as compared to all the states
in Eastern Europe has a big safety cushion i.e. not big foreign debt
in the relation to GDP. ‘Due to this, the country is a good borrower
and loans are provided to us with readiness. Nevertheless, the safety
cushion should be transformed into real economic subjects. This process
is rather effective so far and it will be possible to give real
evaluation to this transformation in late 3Q’, he said. The expert
said foreign trade also has a serious impact on GDP especially when
unfavorable balance of trade suffered certain decline.

As regards the devaluation of the national dram in March, Ameriabank
Development Director said it was rather effective and foreign trade
indicators are evidence of it.

By preliminary data of the Armenian National Statistical Service, GDP
in Armenia was down 15.7% over Jan-May 2009. In May versus April, GDP
was up 15.6% to 839.4 bln AMD ($2.4 bln). GDP index deflator grew 1.4%.

Construction sector was down 56.1% for Jan-May and up 88% in May
versus April to 73 billion drams ($212 mln). Foreign turnover was down
33.7% over Jan-May 2009 and 15.9% in May as against April, making up
$1312.1 mln or 451.2 bln drams. In the structure of foreign20turnover,
export fell 47.8% and 15% over May. Import was down 29.9% for January –
May and 16.2% over May. Unfavorable balance of trade for Jan-May 2009
totaled $871.9 million or 35.5% of GDP.