Azernews.Az

By Mushvig Mehdiyev

Economic sanctions imposed by the West on Russia for its involvement in Ukraine will impact Armenia negatively, reported vesti.ru, a Russian news agency on Sept. 17, given Armenia's dependence on Russia.

Moody's revised the growth forecast of the GDP in Armenia from 3.2 percent to 2.1 percent in 2014 and from 3.6 percent to 2.3 percent in 2015.

The report fixed a sharp decrease in the net export volumes in the post-Soviet country in the first half of the year.

The Global Competitiveness Report ranked Armenia 127th for the share of exports in GDP, while 126th for the external market rate.

Earlier, the international rating agency Fitch had more bad news for Armenia, predicting only 0.5 percent economic growth in 2014 in Russia -- its single largest investor and export-outlet and energy supplier.

Fitch also warned of a decline in Russia amid the crisis in Ukraine, hereby putting in panic its southern neighbor.

The huge Russian companies - Gazprombank, VTB Bank and Rosneft - have great influence on Armenia due to their significant shares. VTB Bank is the largest private lender in the country, while Gazprombank is owned by Gazprom, which is the sole supplier of natural gas to Armenia.

Rosneft company revealed its intention to purchase Armenia's Nairit rubber plant, which Armenian authorities accepted as an impetus to the country's lagging economy. But sanctions made Rosneft to postpone its business deal.

In its latest report the European Bank for Reconstruction and Development forecast a mere 3 percent GDP growth in Armenia in 2014 compared to 5.2 percent in 2013. "Armenia is among the countries with significant risks in doing business with Russia," the report said.

Armenia is possibly joining the Russia-lead Eurasian Economic Union, which is expected to be signed in Minsk, on October 10, will greatly strengthen Armenia's dependence on the Russian economy. Negative effects of Western sanctions against influential Russian companies will not bypass the Armenian economy and subsequently, lessen Armenia's chances to escape their effects without any loss.

The reports of the Moody's and Fitch agencies have fueled disturbance among the people in Armenia. Massive emigration from Armenia gained a momentum following the predictions on the country's grim economic future. This has deepened a sense of the despair amongst residents of Armenia pushing them to leave their native land for a better life abroad.

The latest official report on migration in Armenia proved to be alarming. "Some 9.5 percent of Armenians aged above 15 are involved in external and internal migration flows. As always, 90 percent of the migrants head to Russia," Karine Kuyumjyan, head of the Census and Demographics Department of the National Statistic Service, said.

Kuyumjyan noted that 28.3 percent of the migration flows were internal, while external migration reached 71.3 percent. She also added that every 167 residents per 1,000 have left Armenia in the first half of 2014.