ARMENIAN ECONOMY SHRANK 16% THIS YEAR – GOV’T

AzerNews Weekly
July 28 2009
Azerbaijan

Armenia`s economy shrank 16.3% in the first half of 2009, Prime
Minister Tigran Sarkisian reported.

Further, Armenia`s Gross Domestic Product (GDP) constituted only $3.2
billion in this period, he said.

According to Sarkisian, agricultural production in the country fell
by 4.1% in the past year. Also, the decline in the service sector made
up 1.6%. Output by Armenian enterprises went down 11.1% in comparison
with January-June 2008.

The biggest slump, however, was in the construction sector. According
to official estimates, a 42.4% reduction was posted in construction in
the first half of 2009. But independent experts argue that the decline
in the construction sector actually exceeds 70%. The situation is
expected to further deteriorate in the near future, as the government
is unable to find additional resources to inject into the sector to
foster a turnaround.

In the background of dropping economic indicators, inflation is rising
in Armenia. The country`s statistics body estimated inflationary
levels at 3.9% in January-June and 21.9% during the past year.

Also, the unemployment rate has increased 6.5%. Independent experts
estimate that over 60% of able-bodied citizens have lost their jobs
since the world economic recession began, and the number of the jobless
is on the rise. Moreover, the allocations of foreign aid to Armenia
have more than halved, exacerbating the economic problems further.

In addition to that, Armenia`s foreign trade turnover dwindled
30% to $1 billion in the first half of 2009. Exports halved, and
imports exceeded the volume of exported goods by five times, which
implies a five-fold increase in the country`s negative foreign
trade balance. Experts believe that the situation is disastrous,
warning that the Armenian economy has become dangerously dependent
upon imported commodities.