When the crisis started people were discussing the possible impact on the economy, and the government assured people that it would not be serious. Even more, the government advised not to discuss that issue at all. However, it was easy to guess that time would come and they would discuss that issue in order to justify their policy and the bad situation in the country. This is what is happening now.
For example, on February 20 the board of the Central Bank organized a session. The CB statement concerning the mentioned session reads the following: “The results of the world economic crisis are deeper and wider now, which is also proven by the predictions of international institutions concerning the expected fall in economic development in the world.” As for the existing difficulties, both the government and CB are starting to use the right terms to describe things. “The rapid reductio0n of world demand has negatively affected especially on the export sectors of the economy. Besides the food export there has been reduction in all export capacities,” reads the CB statement. During an economic forum in Tsakhkadzor on February 21 prime minister Tigran Sargsyan said that the export capacity has been reduced, most part of construction works have been frozen, the level of unemployment has grown and people are in bad economic situation. The economy is falling so fast that even the official statistics cannot change the real picture. According to the information of the National Statistics Service, the GDP of January 2009 is less by 0.7% than the GDP of the same period in 2008. It means that the economy did not develop but has fallen in January. The GDP of January month of 2008 was more by 9.9% than the GDP of the same period in 2007. The capacity of production has fallen by 6.5%, and electricity production – by 21.2%. The official statistics reports that 1000 citizens have lost their jobs. During January of 2008 the field of services developed by 7.4%, and in the same period of this year it developed only by 1.4%. However the worst situation is in the foreign trade, thus the foreign trade capacity has fallen down by 24.5%. By the way, both the import and export capacities have been cut down. The import capacity in January 2008 has fallen by 20.2% compared to the same period in the previous year (amounted to 220.1 million dram). As for the export capacity, it has been cut down by 43.9% and amounted to 34.2 million dram.
One of the most important branches of our domestic economy is construction, and during a recent meeting with private construction companies the prime minister said that construction had been one of the key factors of Armenia’s economic development during the past ten years. The construction capacity in January 2009 grew by 13.4% compared to the same period of the previous year. It seems to be good, but it is not so good because the same development rate in 2008 was 79.7%. The government worries about this fact and definitely it is the reason why Tigran Sargsyan met with construction companies and is trying to save this field. Even the CB has discussed the issue of construction business and the above mentioned report specifically writes the following: “The negative affect of external factors on construction is stimulated by uncertainty and reduction of foreign transfers to Armenia.” In between these lines there is fact which they discovered themselves, and it is the fact that the economy of Armenia, which they have been alleging that was flying like a tiger, depends on foreign transfers from abroad. The prime minister also said the following in Tsakhkadzor: “It is not a secret that one of the specifications of our economy is the fact that the foreign private transfers from abroad have a big capacity in it, and according to our estimations the capacity of foreign transfers inflow in Armenia will cut down, and accordingly in parallel with it crimes and corruption risks may grow too.” The mentioned forum organized in Tsakhkadzor was called as “Armenian Davos”. Despite the fact that the real Davos events did not bring to any positive results than mere talks, the prime minister assures that the “Armenian Davos” will be very helpful and it will help to discover the comparative advantages which we have now and due to which Armenia can be attractive for investors to bring their businesses to Armenia. It is hard to say what the comparative differences are that we have but our neighbors don’t. During the forum they said that such factor that Armenia has is the stabile banking system. However, according to the official information, construction businesses are complaining of the crediting system offered by banks. The CB board informs that the existing interest rates are still attractive for capital inflow. If the interest rates are attractive we wander why there is no growth in capital inflow to Armenia. Instead of that the government hopes that there will be inflow of human capital. “Generally the world crisis is a time for people to remember about their motherland and return to their country,” said Tigran Sargsyan. It is not quite clear what the connection is between the mentioned processes and remembering people’s fatherland and definitely only Tigran Sargsyan can understand this. We hope that he also knows the fact that money does not recognize any motherland or fatherland and patriotism is not a factor that may attract money investments. Among all different categories such as banks, foundations and others the most popular and useful one is the Armenian populism.