Armenia’s GDP has reduced 15.7% over the period between January and May 2009, compared with the same period of the previous year. This record datum was publicized by the National Statistical Service of Armenia reports.
Such an index wasn’t mentioned in any pessimistic forecast. Even the former premier Hrant Bagratyan forecasted maximum 6-11% economic slump for this year but the virtual numbers show that we should have been happy with 11% as the numbers are so much higher now. According to the statistical report, Armenian GDP amounted to AMD 839.4 billion ($2437.8 million) at the mentioned period of this year. The report says that May’s GDP is 15.6% greater than that of the previous month. Armenia recorded 9.8% economic growth in Jan-May 2008. 56.1% decline was reported in the sphere of construction which has suffered the greatest losses because of the global crisis. All spheres of economy have had the worst indicators: the production of manufactured goods fell by 10.5%, that of agricultural goods by 2.9% and services by 1.7%. External turnover amounted to 1.3 milliard drams from January to May which is said to have dropped by 33.7% as compared with the same period of 2008. Import reduced by 29.9 and export by 47.8%. Remind that according to official statistics GDP reduced by 9.7% from January to April. As it’s known to say we are receiving messages. On June 9 the above caused the CBA Board to reduce the annual refinancing rates by 0.25% down to 6%. The mounting crisis makes moderation of the monetary policy advisable, which proceeds from effective comparison of stable prices and economic activity. The interest rates on deposits and collateral loans set at 3% and 9% respectively. The CBA Board considered it necessary to reduce the refinancing rate and continue the expansion, which is presently the optimal way of accomplishing the tasks set. “The CBA Board considered it necessary to reduce the refinancing rate and continue the expansion, which is presently the optimal way of accomplishing the tasks set. Downtrends in economic crediting still continue. However, the CBA continues its expansionary policy to encourage banks to credit the economy amid the crisis,” reads the CBA statement. Specifically, long-and short-term REPOs are provided to banks. The CBA is also actively involved in the secondary securities market of Armenia. The CBA Board repeatedly pointed out extremely dim prospects of the macro-environment, which accounts for further inflation expectations in the country. In general, the CBA compared to other state structures has recently become more sincere than the government. But this time the government in the person of the premier Tigran Sargsyan has overtaken the CBA with its sincerity. Two days ago during the government session Tigran Sargsyan literally said the following, “Of course, it’s understandable that there is an issue of technical recession as well. This means that the high level of economic decrease is also stipulated by the fact that during the first six months of the current year we had high indices of economic growth and in this background the indices of the slump will be more remarkable.” Citing the country’s worsening macroeconomic performance, Prime Minister Tigran Sargsyan promised more government assistance to the construction industry during a weekly session of his cabinet on Thursday. “Since investments in construction were mainly coming from Russia, the fall in investment volumes and private remittances is hitting the construction sector in the first instance,” he said. “That is why we have to take additional measures to spur construction.” Sargsyan said earlier that the government will spend approximately 14 percent of a $500 million anti-crisis loan from Russia on housing construction in Armenia’s northern regions devastated by the 1988 earthquake. The government also received in April a $25 million loan from the World Bank for rebuilding rural roads and other infrastructure. The Armenian authorities say that these and other external loans should ease the recession in the second half of the year. They hope that falling interest rates will also reflect positively on the economy. “The first nine months will be the most difficult ones,” Sargsyan told ministers on Thursday. “Our economic indicators will start to improve at the end of the year.” This means that this motive will continue for another 4 months at least. Moreover, the premier was so concerned about the future of the country that forbade the Armenian ministers to take a month of vacations in this difficult situation. He urged them to stay and work. Perhaps there are elements of populism here but we don’t think that this was done only for populist purposes. Regardless of anything it would be stupid to think that the government and the premier personally don’t wish to normalize the economy in the country. But the epilog of Sargsyan’s speech contradicts his demand of forbidding the ministers to leave for a vacation. By reminding them that the summer season is a hard work season for the government the premier as number one issue mentioned the following, “The number one issue that we face right now is to jointly support the State Revenue Committee efficiently levy taxes.” Moreover, the ministers instead of their rest should sit down and think what they need to offer the government for a better rehabilitation of the economy. And we were thinking that the government members would stay in Yerevan to think about the stabilization of the economic situation of Armenians but it turns out that the ministers will even be stricter by helping the State Revenue Committee squeeze out more money from the Armenian citizens. They will invent new creative measures for that. Let’s agree that this is a really hard work by especially taking into account the fact that there is almost nothing else left to squeeze out. It is not excluded that in about the month the representatives of the small and medium businesses will gather in front of the government with posters demanding vacations for the ministers because the person, who is deprived of rest, is more aggressive.