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ARMENIAN BUSINESS CONFIDENCE WANING IN Q1
BYLINE: Venla Sipila
World Markets Research Centre
Global Insight
April 3, 2009
The latest confidence survey published by the Central Bank of
Armenia (CBA) testifies to increasing pessimism among Armenian
companies. Indeed, the business environment index in the first
quarter of 2009 plummeted by a third in annual comparison and by
around 19% from the previous quarter, ARKA News reports. Moreover,
at 33.5 on a 100-point scale, the latest reading of the index shows
that overall confidence remains considerably below the 50-point mark
that separates negative and positive sentiment, reflecting that firms'
views on development of general economic conditions and risks are
gloomy. Meanwhile, the consumer confidence index, gauging households'
expectations on income, expenditures and employment and their views
on the current economic situation, slid by some 15% year-on-year
(y/y) and by some 7% quarter on quarter (q/q), standing at 45.3 in
the first quarter. Further, the economic activity index fell by more
than a fourth y/y, whereas the first-quarter value of 48.1 presents
an increase from the fourth-quarter 2008 reading of 40.7. Falling
below 50, the reading in any case signals that respondent firms'
views and expectations on output, orders and stocks are bleak. Over
800 companies in the industrial, construction and service sectors,
and nearly 1,900 households were surveyed.
Significance:The weakening sentiment among Armenian consumers and
producers fits the weakness of latest data and our projections. While
the business activity index managed an increase from the previous
quarter, also this indicator sill displays a falling trend, as do the
other two components of the survey. Indeed, while the direct impact
from the international financial crisis on the Armenian banking sector
has remained modest, the current global recession does have important
negative implications for Armenia as well, and the effects of sharp
falls in availability of FDI and remittance inflows are becoming
increasingly clear. Indeed, notably via a dramatic slowdown in the
construction sector, the economy as a whole has contracted over recent
months, and this weakness is likely to persist for some time.
BYLINE: Venla Sipila
World Markets Research Centre
Global Insight
April 3, 2009
The latest confidence survey published by the Central Bank of
Armenia (CBA) testifies to increasing pessimism among Armenian
companies. Indeed, the business environment index in the first
quarter of 2009 plummeted by a third in annual comparison and by
around 19% from the previous quarter, ARKA News reports. Moreover,
at 33.5 on a 100-point scale, the latest reading of the index shows
that overall confidence remains considerably below the 50-point mark
that separates negative and positive sentiment, reflecting that firms'
views on development of general economic conditions and risks are
gloomy. Meanwhile, the consumer confidence index, gauging households'
expectations on income, expenditures and employment and their views
on the current economic situation, slid by some 15% year-on-year
(y/y) and by some 7% quarter on quarter (q/q), standing at 45.3 in
the first quarter. Further, the economic activity index fell by more
than a fourth y/y, whereas the first-quarter value of 48.1 presents
an increase from the fourth-quarter 2008 reading of 40.7. Falling
below 50, the reading in any case signals that respondent firms'
views and expectations on output, orders and stocks are bleak. Over
800 companies in the industrial, construction and service sectors,
and nearly 1,900 households were surveyed.
Significance:The weakening sentiment among Armenian consumers and
producers fits the weakness of latest data and our projections. While
the business activity index managed an increase from the previous
quarter, also this indicator sill displays a falling trend, as do the
other two components of the survey. Indeed, while the direct impact
from the international financial crisis on the Armenian banking sector
has remained modest, the current global recession does have important
negative implications for Armenia as well, and the effects of sharp
falls in availability of FDI and remittance inflows are becoming
increasingly clear. Indeed, notably via a dramatic slowdown in the
construction sector, the economy as a whole has contracted over recent
months, and this weakness is likely to persist for some time.