ARMENIAN GROWTH ACCELERATES IN FEBRUARY
Emil Danielyan
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22.03.2010
Armenia’s economic recovery accelerated in February, with Gross
Domestic Product increasing by 3.1 percent in the first two months
of this year, the latest government statistics show.
The year-on-year figure is up from a GDP growth rate of 2.4 percent
registered by the National Statistical Service (NSS) in January. The
modest growth followed last year’s 14.4 percent contraction of the
Armenian economy resulting from the global credit crunch.
The Armenian government and Western lending institutions forecast late
last year that the economy will expand by only 1.2 percent in 2010.
Officials from the International Monetary Fund revised the forecast
upwards last month.
With retail trade and other services flat in January-February, industry
remained the driving force behind the unfolding recovery. The NSS
data show industrial output growing by 9.4 percent on the year and
generating just over one-third of Armenia’s GDP during this period.
Rising international prices of copper and other base metals,
the country’s number one export item, appear to be the main factor
behind this upswing. That also explains why Armenian exports jumped by
53.5 percent to $121.4 million. And in a sign of recovering domestic
consumer demand, the NSS reported an almost 17 percent rise in imports
totaling $503.8 million in the two-month period.
The official statistics also indicate a further slowing of the decline
of the local construction industry, the main engine of Armenia’s
robust growth in the decade preceding the recession. The construction
sector shrunk by 2.7 percent in January-February, compared with its
36.4 percent slump registered in 2009.
The period in question also saw a further increase in consumer price
inflation. A year-on-year inflation rate of 8.2 percent recorded by
the NSS is almost twice higher than the maximum inflation target set
by the government and the Central Bank of Armenia (CBA) for 2010.
Citing the continuing rise in inflationary pressures on the
economy, the CBA raised its benchmark re-financing rate by another
50 percent basis points to 6.5 percent on March 9. It was the third
consecutive rate increase approved by the CBA board in less than two
months. In a statement posted on its website, the bank attributed the
higher-than-expected inflation to rising international commodity and
foodstuff prices as well as the renewed growth.
The question of whether or not Armenia is emerging from its most
serious economic downturn since the early 1990s is a matter of
serious contention in the country’s political arena and even within
its governing coalition. Trade and Economic Minister Nerses Yeritsian
declared late last month that the economic crisis is over. The claim
was publicly challenged not only by opposition leaders but Gagik
Tsarukian, an influential businessman whose Prosperous Armenia Party
controls three ministerial portfolios.
A senior World Bank official likewise cautioned recently that Armenia
has only overcome "the acute phase of the crisis."