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ARMENIAN GROWTH DECELERATES SHARPLY IN OCTOBER
Venla Sipila
Global Insight
December 1, 2011
According to the latest indicator of economic activity published by
the Armenian National Statistical Service, as reported by ARKA News,
the economy expanded by 2.6% year-on-year (y/y) in October. This
marked a considerabe deceleration from the September rate of 9.0% y/y.
Moreover, activity compared to September contracted by 17.9%. The
latest developments resulted in growth of 5.9% y/y in the
January-October period. More detailed data testify to a contraction of
25% y/y in construction activity in October, while industrial output
increased by 14.3% y/y. Agricultural output increased by 7.7% y/y,
while its seasonal fall of some 36% from September seems to explain
a large part of the overall m/m contraction of the economy.
In addition, it was reported that both exports and imports in October
increased by around 21% y/y, while exports plunged by 21% from
September, as imports rose by 2.3% m/m. The resulting trade deficit
for October measured some USD278 million. These results compared
to respective export and import growth rates of 33.5% y/y and 12%
y/y in January-September, while the trade gap for the first three
quarters of the year came in at some USD2.0 billion.
Significance:Deceleration in Armenian growth well fits IHS Global
Insight's expectations. The reasonably resilient growth to date this
year should still secure annual GDP growth close to the government's
official forecast of 4.6%. The Armenian economy, including its export
sector, has benefited from high global commodity prices this year
which have supported the mining industry. In addition, the recovery of
agricultural production following the dismal performance last year has
played a key role, also benefiting the external balances by suppressing
food product imports. The outlook for economic performance in the next
quarters is decidedly weakening, and risks regarding both GDP and
external balances are high and rising. This is because the outlook
for global and European economic performance is severely clouded at
present, not least due to the deep Eurozone sovereign debt crisis. The
impact from deterioration in the external economic environment would
be felt in lower inflows of very important remittances.
Venla Sipila
Global Insight
December 1, 2011
According to the latest indicator of economic activity published by
the Armenian National Statistical Service, as reported by ARKA News,
the economy expanded by 2.6% year-on-year (y/y) in October. This
marked a considerabe deceleration from the September rate of 9.0% y/y.
Moreover, activity compared to September contracted by 17.9%. The
latest developments resulted in growth of 5.9% y/y in the
January-October period. More detailed data testify to a contraction of
25% y/y in construction activity in October, while industrial output
increased by 14.3% y/y. Agricultural output increased by 7.7% y/y,
while its seasonal fall of some 36% from September seems to explain
a large part of the overall m/m contraction of the economy.
In addition, it was reported that both exports and imports in October
increased by around 21% y/y, while exports plunged by 21% from
September, as imports rose by 2.3% m/m. The resulting trade deficit
for October measured some USD278 million. These results compared
to respective export and import growth rates of 33.5% y/y and 12%
y/y in January-September, while the trade gap for the first three
quarters of the year came in at some USD2.0 billion.
Significance:Deceleration in Armenian growth well fits IHS Global
Insight's expectations. The reasonably resilient growth to date this
year should still secure annual GDP growth close to the government's
official forecast of 4.6%. The Armenian economy, including its export
sector, has benefited from high global commodity prices this year
which have supported the mining industry. In addition, the recovery of
agricultural production following the dismal performance last year has
played a key role, also benefiting the external balances by suppressing
food product imports. The outlook for economic performance in the next
quarters is decidedly weakening, and risks regarding both GDP and
external balances are high and rising. This is because the outlook
for global and European economic performance is severely clouded at
present, not least due to the deep Eurozone sovereign debt crisis. The
impact from deterioration in the external economic environment would
be felt in lower inflows of very important remittances.