The information on the 14.4% economic recession was surprisingly accepted by the society calmly. It is hard to say why. Maybe the reason is the fact that the developments on the protocols signed between Armenia and Turkey have cast a shadow on this economic issue.
In fact this indifference of the society is as dangerous as the fact of the recession itself. Maybe this 14.4% slump was a better rate compared to the 18.5% of 2009 and that is why people are not concerned so much. It means that this economic slump rate has leaved an impression that the situation is getting better. From this point of view the government caught the right moment and introduced it as a little positive development of the economy. For example, recently the prime minister said at an occasion that the economy had started recovering and after a slump of 18,4% the economy had recovered reaching a slump level at 14,4%. Certainly it is not the best picture, thus the government would feel happy if there was any country among the neighboring countries with deeper economic crisis rate and recession, however we have the worst situation compared to the other countries of the CIS.
We wander whether the economy has really started recovering. We agree with the fact that the slump is 14.4% now instead of 18.5%, but it doesn’t show what the real picture looks like.
The prime minister’s word “recovering month by month” is very interesting as it shows how this tendency may be calculated for comparison. It is very interesting to compare the monthly GDP rate with the same periods in the previous years. For example, we may compare the GDP of September 2009 with the GDP rates of the same month in 2008, 2007 and 2006.
GDP per month, 2006-2009, billion dram
In order to show the dynamics of the economy better, we have made a chart based on the information provided by the national statistics service, which shows how much less or more is the GDP of every month compared to the same month of the previous year.
For example, it shows that the GDP produced in March 2007 is more by 24.5% than the GDP produced in March 2006. This positive tendency continued during the months of the entire year, as a result of which the total growth rate for the year reached 13.8%. In 2008 the year started very well and during the ten months of the year there was positive growth. In the 10th month the difference was very small (4.3%), and the last two months were closed with negative growth. As a result the annual growth rate was 6.8% instead of the expected dual digit growth rate.
The situation in 2009 is quite different. The GDP in January was less by 1% than that in January 2008. Month by month this negative difference grew and eventually reached 30%. The positive development they refer to is pretty exaggerated. For example, the GDP capacity produced in November 2009 is equal to the GDP capacity in November 2007.
This calculation was done to show to our readers that the “month-by-month growth” they refer to is not a real growth and is mere calculation and manipulation of figures. In other words, it is an empty balloon. The government is bragging about this “empty balloon” so intensively that it is scary to imagine what they would do if there was real economic growth.