ECONOMIST PREDICTS 12%-14% FULL-YEAR ECONOMIC DECLINE

ARKA
Aug 26, 2009

YEREVAN, August 26, /ARKA/. Manuk Yerghnyan, head of Economy and Values
think-tank and the managing partner of EV Consulting, predicted today
a 12-14% full-year economic contraction of the Armenian economy,
but declined to make an economic forecast for the next year, saying
the country’s GDP may either fall by 2% or rise as much.

In an exclusive interview with ARKA news agency, he said the economic
recovery is not likely in the second half of the year. According
to him, the slump in some sectors may even deepen and some large
companies may face serious difficulties in servicing their loans.

"I do not think we shall see a chain reaction; the level of financial
mediation in Armenia is the lowest among other transitional countries,’
he said, adding that the government emergency assistance to some
companies is expected to have a positive effect on the economy.

Earlier this month Prime Minister Tigran Sargsyan said the anti-crisis
measures taken by the government should result in a slowdown of the
decline later this year that would ultimately have made only 12% t
annually. The premier said the government also expected the Armenian
economy to grow by a modest 1% in 2010.

"I think the period of adaptation to current economic situation -I mean
the reduced amount of remittances, foreign investments and exports,
will end in 2009 and we=2 0shall see a more stable situation in 2010,
‘Yerghnyan said.

According to official figures of Armenian Central Bank, the amount of
remittances sent by Armenians working abroad to relatives in Armenia
via banks in the first six months of the year slashed by 33.2%
year-on-year to $446.7 million.

Armenia’s foreign trade in January-July fell 32.7% year-on-year to
707.9 billion Drams ($2.013. billion). Exports were down by 44.5%
to $352 million and imports reduced by almost 30% to $1.661 billion.

In a comment on a 15% economic decline of the Armenian economy
predicted by Fitch Ratings, Yergnyan said it is perhaps the worst
scenario.

According to the latest official figures, the country’s economy
continued to decline in July amid a deepening fallout from the global
recession, showing a 18.5% Gross Domestic Product contraction in the
seven months of 2009. ($1 – 375,39 дÑ~@амР°).