Trade banks forecast that in March 2009 the Armenian dram will devaluate and the AMD-USD exchange rate will become about 320.
Such forecast was written in the CB’s report entitled Banks and Credit Organizations Quarterly Research Resume for the Fourth Quarter of 2008 published recently. To note, according to the information of trade banks in the third quarter of 2008 the median USD-AMD exchange rate expected for March 2009 was 300 AMD. Furthermore, banks forecast that the exchange rate will grow in June 2009 and will become about 325 AMD. By the way, 16 banks forecast that the national currency will revaluate, 3 banks say it will devaluate, and other 3 banks think that the exchange rate will not change (now the exchange rate is 305). Banks have very interesting expectations concerning inflation and economic growth in 2009. Thus, 11 banks have predicted 5.5-8.5 % inflation during December month of 2009 compared to the inflation rate of the same period in 2008, and 3 banks forecast that the inflation rate in the same period will be more than 8.5%. It is worth mentioning that the state budget for 2009 envisages maximum 5,5% inflation growth (the target rate of inflation is 4+/-1.5%). In fact 14 banks out of 22 ones are expecting that the mentioned inflation rate will not be kept. In other words, the mentioned banks don’t believe the government. As for economic growth, most of the trade banks think that the economic growth in January-December 2009 will make about 8.5%. By the way, according to bank surveys in the third quarter of 2008, the expected economic growth would make 8.5-11.5% during the period of January-September 2009. If during the third quarter of 2008 fifteen banks out of the 22 banks forecast more than 8.5% economic growth for 2009, and only 7 banks forecast less than 8.5% economic growth, during the fourth quarter of 2008 only 6 banks predicted more than 8.5% economic growth (and 16 banks predicted less than 8.5% economic growth). The expectations of banks concerning business and other credit interest rates for March month of 2009 are very interesting too. The smallest change of interest rates is expected for consumer loans: according to banks in March 2009 the interest rates of consumer loans will increase by 1.1% and will become about 20.9%. The biggest change of interest rates is expected in business loans. Banks forecast that during this period the interest rates of business loans will increase by 3.7%. Mortgage credit interest loans are in between these two forecasts, and the expected growth of interest rates on mortgagee credits will be about 2.3 points compared to the same period of 2008. By the way, banks forecast that the capacity of mortgage credits provided during the first three months of 2009 compared to the same period in 2008 will be cut down by 64%. During the first part of 2008 the capacity of provided mortgage credits amounted 5.5 bln dram, it is expected that the capacity of mortgage credits to be provided in the same period of 2009 will not exceed 2 billion. It is very strange that in parallel with increasing the interest rates on loans the banks don’t want to decrease the interest rates on deposits and savings. Banks have very interesting predictions concerning the expected capacity of bank transfers on part of physical persons. Banks forecast that during this quarter of the year the money inflow capacity into Armenia will decrease by 9.3% and the outflow will increase by 160%. Thus, if during the same period of 2008 Armenians received about 670 mln AMD from abroad, it is predicted that this money transfer capacity will be about 600 mln this year. If the capital outflow capacity of non-commercial transfers amounted 110, during the first quarter of 2009, according to banks, this sum will become about 300 million.
In a word, the above mentioned predictions contain very interesting information concerning Armenia’s economy and the real situation. While the government is inspiring only optimistic expectations in the society, the banks forecast the same changes as non-governmental experts and media, i.e. they predict that the prices of real estate will fall down rapidly, which is first of all a result of the fact that banks will significantly cut down the capacity of mortgage credits provided to people, as well as the real estate prices will fall down due to the fact that there is a great outflow of currency from the country, which is a result of the government’s policy to make Armenia an island of cheap dollar. By the way, these forecasts have been published by the CB, which means that have been “filtered”. Accordingly, we can only try to understand what the real situation of our economy is and how it may be like if the CB has published such pessimistic information after “filtering” it.