Unlike the government’s assurances that the crisis will not have any impact on our country, now they say that even it will have a positive affect on our economy.
Such idea was expressed by PM Tigran Sargsyan during a meeting with representatives of Gazprombank CJSC. Concerning the ongoing tendencies in the world and the fact that everyone is trying to find more secure places to invest their savings the prime minister emphasized that Armenia is that place where everyone can invest.
Let’s imagine our country is a small island of stability in the entire world of instability. A question originates. Which are the fields that those people can invest in? Such people who are looking for stabile areas to invest are used to investing in stock markets, but there is no stock market in Armenia. If they mean direct investments, developing businesses from zero, there are a lot of problems here starting from the geopolitical situation in the unstable region and ending up with corruption. Besides that all the profitable spheres of the economy are occupied by Russians. Does the PM advice the foreign investors to build new elite buildings or buy apartments at the North Avenue or in the center? The only place to invest in Armenia is the real estate market. It may attract some investors too. By the way, if they buy apartments they will help the local rich businessmen who are building houses and will activate the stagnated real estate market. Plus, if they build new houses, they will stimulate economic growth during the coming years as well. They can also build new leisure places and restaurants too. These forms of business will be profitable because there is certain demand on apartments and leisure as the main consumers of these products and services are a small group of rich people, but not the population which is stagnating demographically but not growing. By the way, according to the National Statistics Services, the population of Armenia as of July 1, 2008, is 3,231,900. However, according to the information of the World Bank, which sometimes provides advisory support to the Armenian government, the population is 3,010,000. This information is posted at the following site: http://www.worldbank.org.am . This information concerns 2006 but it doesn’t change the situation because according to another publication of the National Statistics Services the population of Armenia as of July 1, 2006, was 3,219,400. In fact, if we believe that the WB’s information based on different sources is true, it means that the Statistics Services have increased that number artificially. Is it good for the government or no? Certainly it is good, but there are negative things too. For example, they have fewer opportunities of praising their work. One of the most important indicators of estimating economic growth is the GDP rate per capita. Thus, according to the information of the Statistics Services the GDP of 2007 was $9.23 billion. If we take into account that the information of the Statistics Services is true and there are 3.2 citizens in Armenia, the GDP rate per capita is $2884. Furthermore, if we take into account that the population of Armenia is 3 million, then the GDP per capita is $3076.
One may ask why we are discussing this rate so much. The answer is that our government likes to praise it as well. For example, two days ago the minister of finances Tigran Davtyan spoke about the Stabile Development Project and said: “The project expects such GDP growth rate, which will result in $5.8 thousand GDP per capita rate in 2012, in 2015 7,7 thousand, and a high level at 12,6 thousand dollar per capita GDP rate in 2021”.
There are at least two reasons why we should believe it is true. There are no reasons to say that during the coming years the population of Armenia may grow faster than the GDP. Also, the exchange rate of USD and AMD may play a significant role in raising this rate. In other words, if the government wants it can raise the GDP per capita rate twice if it uses its market mechanisms and tools to reduce the exchange rate from 300 to 150.
On the other hand, we can’t say what the prices expressed in dollar may be in 20012 because during the past years the prices expressed in dollar have grown much. Furthermore, this year the inflation rate of the past twelve months is close to 12%. In consideration of the above-mentioned the minister’s forecast that the poverty level will be 7% in Armenia in 2021 sounds unbelievable.
By the way, in answer to journalists’ question whether the economic crisis in the world may not affect the implementation of the mentioned project the minister said: “I think that in this phase the economy of Armenia is less involved in the processes that are happening in the world economy, in the economic and financial systems, especially in the world finance system. This is one of the reasons why we don’t feel that shock so much.”
It turns out that we are quite isolated from the external world, and the prime-minister assures that in such conditions we will become one of the financial centers of the world. Despite these factors the government is optimistic and they say they have targeted the European, Eastern-European and Central Europe’s economic development level as a goal. On the other hand this optimism is justified: while the European countries will stagnate or try to develop, we will step by step develop to the level of their economic development. We will develop faster, if we find foreigners wishing to invest in “stabile places”.