BY WB FORECAST, DECLINE OF ARMENIAN ECONOMY TO MAKE 9-10% BY LATE 2009

Noyan Tapan
July 3, 2009

YEREVAN, JULY 3, NOYAN TAPAN. Satisfactory macroeconomic indices
were ensured in Armenia under conditions of the global financial and
economic crisis. Head of the World Bank Armenia Office Aristomene
Varudakis said this at the June 3 press conference, adding that the
Armenian government has made great efforts in this direction.

However, in his words, along with a good macroeconomic policy, the
country should have a well-protected vulnerabale stratum of society
as the crisis has had a negative impact on the level of unemployment
and poverty is likely to grow in the near future. A. Varudakis said
the WB is prepared to support Armenia in this issue in order to ensure
sustainable development in the country.

He announced that by WB forecast, the economic decline will make
9-10% in Armenia by late 2009. The construction sector contributing
to Armenian GDP growth declined by 56%, due to which GDP fell by
15.7%. "Construction makes up 30% of GDP in Armenia. The main reason
for the decline in construction is the reduction of remittances,"
A. Varudakis underlined.

The obviousness of economic decline in Armenia, according to him,
is conditioned by the fast growth of the economy in the same period
of last year. "However, the decline index will not be very high by
late 2009 as compared with last year because the economic growth was
not so rapid in the third quarter of 2008," he noted, adding that by
WB forecast, by the end of this year the Armenian economy will show
stabilization tendencies, but signs of recovery will emerge in early
2010. The economy will grow by 1-2% in 2010.

Speaking about Armenia’s foreign debt, A. Varudakis said that
WB is not of the opinion that Armenia has problems with its
redemption. International organizations have given credits to Armenia
on quite attractive conditions in recent months. "It is obvious that in
case of attraction of such considerable resources, Armenia’s foreign
debt will sharply increase: in 2008 the foreign debt-GDP ratio made
13% in Armenia, whereas in 2011 it will make 45%," he said. Although
the index of debt is high as compared to tax revenues, in his words,
the debt-GDP ratio will decline in parallel with economic recovery
and amount to 30%.

A. Varudakis pointed out that Armenia should mainly develop its
economy not by encouraging construction sector, but by improving export
indices. He said that WB will support Armenia in this issue as well.