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Armenian GDP, Exports Continue Rapid Contraction During October

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  • Armenian GDP, Exports Continue Rapid Contraction During October

    ARMENIAN GDP, EXPORTS CONTINUE RAPID CONTRACTION DURING OCTOBER
    Venla Sipila

    World Markets Research Centre
    Global Insight
    Nov 23 2009

    According to the latest national accounts figures from the Armenian
    National Statistical Service, the country's economy collapsed by
    17.5% year-on-year (y/y) in January-October, ARKA News reports. In
    October alone, GDP contracted by 5.1% from September. Coming after
    the January-September contraction of 18.3% y/y, these most recent
    figures suggest some moderation in the rate of annual output decrease
    in October.

    However, this does not provide much reason for cheer, especially
    compared with the very respectable economic growth rate of 9.2%
    y/y seen in the first 10 months of last year. Industrial output in
    January-October fell by 11.4% y/y, whereas activity in the construction
    sector plummeted by 41.6% y/y. Meanwhile, agricultural production fell
    by 0.8% y/y. Further, it was reported that exports from Armenia in the
    first 10 moths of the year suffered a fall of 40.7% y/y, amounting
    to $551US.6 million, while imports at the same time contracted by
    28.5% y/y, totalling $2US.57 billion. Thus, the trade deficit for
    the January-October period came in at $2US.018 billion. The figures
    suggest some deceleration in the annual exports contraction in October,
    whereas the fall in imports slightly accelerated. In October alone,
    exports decreased by 1.4% from September, while imports increased by
    6.1% from the previous month.

    Significance:Whereas the severe collapse of the Armenian economy now
    should start to ease, as cautiously suggested by the latest data, the
    still worse-than-expected performance in the third quarter justified
    yet another downward revision in IHS Global Insight's Armenian GDP
    forecast in the November round. We expect 2009 annual contraction to
    somewhat exceed the lower end of the government's forecast of a 10-15%
    fall. The extreme severity of the current Armenian economic conditions,
    including its major liquidity pressures, has been underlined by the
    fact that it has had to seek revisions to its stand-by arrangement with
    the International Monetary Fund (IMF), which has approved changes to
    programme terms and payment schedules (seeArmenia: 3 November 2009:).
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