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Armenian Growth Accelerates In February

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  • Armenian Growth Accelerates In February

    ARMENIAN GROWTH ACCELERATES IN FEBRUARY
    Emil Danielyan

    http://www.azatutyun.am/content/article /1990731.html
    22.03.2010

    Armenia's economic recovery accelerated in February, with Gross
    Domestic Product increasing by 3.1 percent in the first two months
    of this year, the latest government statistics show.

    The year-on-year figure is up from a GDP growth rate of 2.4 percent
    registered by the National Statistical Service (NSS) in January. The
    modest growth followed last year's 14.4 percent contraction of the
    Armenian economy resulting from the global credit crunch.

    The Armenian government and Western lending institutions forecast late
    last year that the economy will expand by only 1.2 percent in 2010.

    Officials from the International Monetary Fund revised the forecast
    upwards last month.

    With retail trade and other services flat in January-February, industry
    remained the driving force behind the unfolding recovery. The NSS
    data show industrial output growing by 9.4 percent on the year and
    generating just over one-third of Armenia's GDP during this period.

    Rising international prices of copper and other base metals,
    the country's number one export item, appear to be the main factor
    behind this upswing. That also explains why Armenian exports jumped by
    53.5 percent to $121.4 million. And in a sign of recovering domestic
    consumer demand, the NSS reported an almost 17 percent rise in imports
    totaling $503.8 million in the two-month period.

    The official statistics also indicate a further slowing of the decline
    of the local construction industry, the main engine of Armenia's
    robust growth in the decade preceding the recession. The construction
    sector shrunk by 2.7 percent in January-February, compared with its
    36.4 percent slump registered in 2009.

    The period in question also saw a further increase in consumer price
    inflation. A year-on-year inflation rate of 8.2 percent recorded by
    the NSS is almost twice higher than the maximum inflation target set
    by the government and the Central Bank of Armenia (CBA) for 2010.

    Citing the continuing rise in inflationary pressures on the
    economy, the CBA raised its benchmark re-financing rate by another
    50 percent basis points to 6.5 percent on March 9. It was the third
    consecutive rate increase approved by the CBA board in less than two
    months. In a statement posted on its website, the bank attributed the
    higher-than-expected inflation to rising international commodity and
    foodstuff prices as well as the renewed growth.

    The question of whether or not Armenia is emerging from its most
    serious economic downturn since the early 1990s is a matter of
    serious contention in the country's political arena and even within
    its governing coalition. Trade and Economic Minister Nerses Yeritsian
    declared late last month that the economic crisis is over. The claim
    was publicly challenged not only by opposition leaders but Gagik
    Tsarukian, an influential businessman whose Prosperous Armenia Party
    controls three ministerial portfolios.

    A senior World Bank official likewise cautioned recently that Armenia
    has only overcome "the acute phase of the crisis."
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