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Armenian government downplays predictions of economic downturn

22 May 2015 15:56 (UTC+04:00)
Armenian government downplays predictions of economic downturn

By Sara Rajabova

Forgetting about his country's economic realities and ignoring the reports on further downturn in Armenia, the prime minister has kept on assuring his countrymen that the nation will register growth in 2015.

At the last government meeting, Hovik Abrahamyan shocked his ministers and all other Armenians with news that economic growth in Armenia for 2015 will amount to at least 2-3 percent.

He said the country has for the first four months recorded 2.2-2.3 percent economic activity, the Armenian economic agency "ARKA" reported.

His remarks followed a series of reports enouncing Armenia, where 32 percent of all Armenians live under the poverty line, expecting economic slowdown, inflation and rise in poverty.

The economic recession in Russia has consequently impacted all Russian related economies, especially Armenia that is heavily dependent on money transfers from its “big brother.”

The Armenian Central Bank’s data of March showed that transfers from Russia to Armenia through the banking system of the country sent to individuals for non-commercial purposes decreased by 40.2 percent compared to March 2014.

Demanding to put an end to talks that the economic downturn is expected in the country, Abrahamyan even claimed that the government will try to reach 4.1 percent economic growth.

“According to the government's medium-term program, one percent economic growth is planned on the results of 2015, which, I am sure, would be higher - a minimum of 2-3 percent. With implementation of the planned programs, we will even try to achieve 4.1 percent economic growth as indicated in the state budget,” Abrahamyan said, presenting his vision of Armenia’s economic situation.

However, international financial organizations are not as hopeful when it comes to Armenia's economic situation as its very optimist prime minister.

A recent report by the International Monetary Fund showed that Armenia holds a special place among those countries with serious economic problems.

IMF experts claimed in the regional economic outlook update for Caucasus and Central Asia released on May 19 that Armenia is the only country in the region, which will observe a decline in gross domestic product by about one percent.

The report said there will not be real GDP growth in Armenia in 2016 as well, adding that a zero rate growth is predicted.

Inflation in Armenia in the near future will also be quite impressive, the report said. Growth in consumer prices in 2015 will stand at 6.4 percent instead of 3 percent in 2014.

One of the leading international financial institutions - the European Bank for Reconstruction and Development also updated its forecast on Armenia's GDP in 2015, reducing it from zero to minus 1.5 percent, Regnum reported.

Reports by the international financial institutions clearly show that Armenia’s economic situation in the near future will not be heartwarming. Armenian economists also raised the alarm, saying that Armenia's economy is slipping into recession.

The National Statistical Service data showed foreign trade, which in the first quarter stood at $945.1 million, reduced by 28 percent, while imports decreased by 30.5 percent and exports about 23 percent, Lragir reported.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

Follow us on Twitter @AzerNewsAz

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