It is an established fact that during major political processes, especially during electoral periods the economic development of countries becomes slower, stops or stagnates.
Different fields of the economy are affected by such processes differently. Armenia is not an exception and the 2008 election year has become unprecedented for Armenia. Also the routine life and the rumors in the country can show that the economy of Armenia is living hard times. One can hear such ideas in shops, agriculture markets, taxis, buses, companies, banks, travel and real estate agencies and in all other places where people interact. After March 20 the RA statistics service will publish its consecutive report. In addition, the taxation services will publish the list of the biggest taxpayers as well. These reports will allow comparing the percentage numbers and seeing the level of influence of this presidential election on our country. However, before these reports would be issued we tried to ask different businessmen and coordinators about the influence of these political processes on their businesses and fields. “Yes, it is clear that the electoral processes have affected the level of activity in business fields. I can see that the capacity of trade circulation has fallen by 10-15%. You know, political processes always are affecting the situation in the periods of one or two months before elections,” says the chairman of the Producers’ and Businessmen’s Union Arsen Ghazaryan.
If a separate field of the economy stagnates or develops, this change can influence on the banking system first. Concerning this viewpoint the head of the Armenian banks’ union Emil Soghomonyan says that during the January and February months of this year the capacities of both the foreign transfers in the country and banking transactions have been cut down. In other words, if the capacities of bank transactions are being cut down, it means that there is some stagnation of the economy. Mr. Soghomonyan did not bring any number to specify that stagnation but promised to present the clear picture in the end of April. It is worth mentioning that almost all our interlocutors were speaking very carefully. Those who had pessimistic opinions did not want to discover their names. Economists say that electoral processes first of all can affect the fields of real estate and tourism businesses. According to the founding director of the Esco company Sargis Aghabekyan, in the pre-election and post-election period the prices have not gone down in these fields, but the number of transactions was cut down. Furthermore, Mr. Aghabekyan says that such passiveness was observed during the 2007 parliamentary elections as well. “There are some sectors, where the demand for real estate property didn’t fall, but is frozen. It means that there is demand, people want to purchase real property, but definitely prefer to make their transactions in 1-1,5 months. This fact mainly concerns the transactions for buying apartments and trade premises. As for the big investment stuff, yes, this part is not active yet. We hope that this field will start developing in 3 months too. Generally the market has become stabile; if there was a huge fall of prices during the 2003 election, this time such tendency is not observed yet. It is even the vice versa; the prices have grown to some extent,” says S. Aghabekyan.
Independent broker Aram Gharibyan says that the prices of real estate property have fallen down during these several months. “On the account of what can inflation grow? There must be growth of constant demand in order to raise inflation. There is not interaction, the market is dead. It doesn’t matter how much the governmental agencies say that the prices are growing, in fact it is not stipulated by the real market. It is correct that the prices in the North Avenue are growing, but it doesn’t concern the entire market. To some extent it is also an artificial stimulation of growth. You can’t say that there are no transactions at all. There are, but very few transactions. There aren’t large investors, people don’t buy expensive property. Properties are sold at much lower prices than the real market prices. Furthermore, people are not able to cover the expenses on leasing properties. It can be evaluated otherwise too, it means that there is not economic active interaction in order to create money and cover expenses,” the broker says.
The director of Tatev travel company Arlen Dalvutyan says that their company is involved in bringing tourists mainly form Iran. The people of Iran have got used to sharp political situations. However, after the recent period two groups consisting of 40 tourists have refused to visit Armenia. They are waiting for another group to arrive till March 20, who have booked the tickets but haven’t paid for yet. Davlutyan says that he is afraid this group may refuse to come to Armenia as well. “We are calling them, explaining that there isn’t anything dangerous here and telling them to come. I don’t know whether they will come or no. You know people were mostly afraid of the emergency situation. They would not be afraid if here were no state of emergency after March 1,” says Mr. Dalvutyan.
The head of the Armenian office of the world famous Synopsis company Hovhannes Musayelyan is concerned about the situation as well. The Synopsis has been working in Armenia during the past four years, it has enlarged the scope of the programs implemented, but the directors of the company are highly concerned about the incidents that happened in the beginning of spring. According to Musayelyan, their company, which has representations in over 25 countries of the world, classified Yerevan as one of the most stabile and secure cities of the world before the recent incidents. Now this company is concerned of the destinies of its Armenian staff. “We need to make many efforts to convince people that everything is normal here and that they can come. They are mostly concerned that after the state of emergency people may go out to streets, organize rallies and demonstrations, and will not understand where the real problem lies. It is a serious risk factor for them. They have some lack of information as well. If this political instability goes on, it is not excluded that they may revise their programs. It doesn’t matter to them which political party has come to power here; the most important thing for them is the political stability. I don’t know their intentions yet but I can see that they are highly concerned. All what happened here is out of their sphere of imaginations,” says Mr. Musayelyan.
Tosp company, which is involved in cloth wearing production and export, has sold fewer products than before. “It can’t be worse”, says the director of the company Suren Bekinski. However, Mr. Bekinski also says that despite these days their company has been experiencing difficulties during the last 3-4 years as well. The reason of this crisis is the devaluation of the US dollar. The president of Nushikyan association Garegin Nushikyan says that the capacity of their business has fallen as well. This association includes perfume trade, advertisement and restaurant businesses. The Nushikyan association’s business has stagnated in all these fields. However, Mr. Nushikyan did not tell us how much the capacity of that loss is. “We can evaluate that only in one or two months,” he said.
We have tried to get opinions and estimations from economists on the possible affect of the electoral procedures on the economy and also the specific results that the recent presidential election had in Armenia. “If elections can bring to some tension in other countries, it is the vice versa in Armenia. We are different. There were presidential and parliamentary elections in 2003, also there was a Constitutional referendum in 2005. During those two years the Armenian economy had the highest economic growth digits – 13,9%. This is why I say we are different. It is a very interesting thing for Armenia. We had 13,7% economic growth in 2007 as well. On the other hand, about 50% of this growth is provided by private money transfers. If Armenia is receiving about 1,5-2 billion dollar each year, it means that it helps the economy grow to a certain extent,” says economist Edward Aghajanov. By the way, yesterday when we were speaking to Mr. Aghajanov by phone he was at the police department of Nor-Nork community. The police had invited him to that police station to give testimony. “I was simultaneously giving testimony and answering to your questions,” Mr. Aghajanov said to us later.