“Making predictions is an ungrateful occupation,” say the all the representatives of the government, the oppositionists and independent experts and the specialists of international financial organizations. They say so…but continue making forecasts.
At the beginning they were saying that the economic plummet in Armenia will be zero in 2009; afterwards they said 1-2%, then 5%, then 7-8%, then 10-12% and so on. The forecasters call this process “correction.” Our government comprehends the word “correction” in a unique way. If the anticipated 5% due to various factors should become 5.5 or 6, 7 it can be called correction. But when 0 becomes 5-6, let alone 10-15 then it is no more correction but confession of embarrassment. But how can you be a statesman if you cannot justify your predictions. I think it was Churchill, who said that the political actor is the one, who makes a prediction and then justifies why the prediction didn’t come true. Our government explains the 9% slump as a result of global economic crisis, which proceeded in a worse scenario than expected. Moreover, they are trying to convince that they were not much mistaken. For example during his meeting with journalists yesterday the RA Minister of Finances Tigran Davtyan mentioned that the indices of January-February were no surprise or anybody. “The forecasts mainly remained in the frames that we anticipated for this year based on the global crisis influence,” said Davtyan. It turns out that it was no surprise that Armenia with its economic slump would occupy the “honorable” first place among the CIS states. There are countries, which registered economic growth in the conditions of the global crisis. Those countries are Uzbekistan and Azerbaijan. Davtyan has explanation to this: Armenia didn’t have stored resources as Russia or Kazakhstan, which could have covered the budget deficit with those resources. "With the given figures we do not aim to exceed the 7-percent deficit set by the National Assembly. At the most, the deficit will reach 6-6.5%. Next year the deficit will fall to 5.5%. The figures will keep dropping year by year reaching 3%," said the Minister. During the press conference one got the impression that everything is brilliant in Armenia and "pensions and salaries have been increased by 18% having 18% economic decline in the country." The crisis has caused social cataclysms throughout the world. The aftermaths of the global crisis were felt in CIS countries stronger than in Armenia. "Thanks to our government Armenia didn’t feel the crisis too strongly. The government took loans in due time and invested the money in economy with privileged conditions for businesspeople and manufacturers." In the meantime the international organizations would repeat one by one that Armenia is going to withstand the crisis from high positions. “Among the CIS countries the Baltic states and Ukraine got it worse from the crisis than us. And the reason of all this is that our government was able to get loans on time and create privileged conditions for exporters at the expense of the decrease of budget incomes.” The minister emphasized positive signals coming from leading economies that they were going out of the recession. According to the minister, this success is creating a positive backdrop for the Armenian economy, which being open and interrelated with world economies, depends on global economic developments. “On a yearly basis we will have a fairer result. According to some forecasts, Armenia may close the year with a 10-15 percent GDP decline. We also expect a gradual economic recovery to start next year, and we forecast a 1-1.5 GDP growth in 2010.” Davtyan reiterated the position of the government that so far has been reluctant to sequester the 2009 state budget that was approved last year on a 9.2 percent GDP growth projection, shortly before Armenia began to feel in full measure the fallout of the global economic recession. The minister described the fulfillment of the existing budget as ‘consonant with Armenia’s current economic situation. As you know the official statistics have predicted an 18% GDP slump for the 7 months of this year. So the government assures that things are going to get better. And the optimism is justified by two factors – the anti-crisis initiatives of the government and the positive motives noticed in the international economy. However, there is another no less important circumstance, which transmits confidence to the government. Those are the bad indices of the end of the last year. Let us simplify this. The official statistics compare the indices of January-July to the same months of the previous years, which provided 10.7% economic growth. Then, starting from August-September, the rates of the economic slump decreased. And in October-November of 2008 there was even reduction of the GDP. So if we compare the indices with the ones of the end of the last year it is natural that the indices of the current year will look better. Let us describe this. If we compare a very ugly woman with a pretty one then the difference will be immense. But if we compare the very ugly woman with a not very pretty one then the difference is not going to be very perceptible. In this case, the pretty woman is the dual-digit number of the last year; the very ugly one is the economy of the first months of this year. Everything is comparable. So beauty and indices are no exception. A clearer understanding of the economic developments can be drawn by comparing the GDP rates month by month. So now let’s do a little comparison. In the picture 1 we presented the GDP results of 2007, 2008 and the 7 months of the current year. From the picture you can see that during certain months of 2008 the GDP (the tables in light color) the indices exceeded the indices of the same months of 2007. For example, during June 2007 our economy has created an income of 251 billion AMD and in June 2008 87 billion 338 million more (or 34% more). The picture also shows that this growth remained till September 2008 by providing 10.6% economic growth for January-September. During the next two months the economy dropped its rates. As a result the economic growth for the year didn’t exceed 7%. Now let us compare the indices of the seven months of the current year (dark color tables). It clearly shows that starting from January we have produced less result month by month compared to the respective months of the previous year. And the indices gradually lessen, which explains why an 18% economic slump is planned for this year. And what should be done to improve the economic indices? Indeed the economic development should be encouraged so that more is produced for the next months, so that the negative difference is cut compared to the previous months. Starting from September of the last year the rates have dropped. This is what the Prime Minister Tigran Sargsyan has been speaking about by mentioning that the rates are going to deteriorate for the upcoming 9 months. The Prime Minister called the phenomenon a “technical recession.” According to the same logic the improvement of the next years can be named “technical improvement” because it will be registered not to the economic growth but in the background of the indices of the previous months of the year. Tigran Davtyan has also mentioned this yesterday by emphasizing that the indices of the end of 2009 will improve because in the end of 2008 the base of the GDP growth is reducing. By wrapping up this perhaps boring clarification let us fix one thing. We are speaking not about the economy but about indices. We have always been like this. If during the past several years we haven’t had focused on indices our economy wouldn’t be so miserable right now. And in the near future only the indices will improve as we don’t have an economy as such.