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Eurasian Development Bank: Deceleration Of Growth Against The Backgr

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  • Eurasian Development Bank: Deceleration Of Growth Against The Backgr

    EURASIAN DEVELOPMENT BANK: DECELERATION OF GROWTH AGAINST THE BACKGROUND OF HIGH INFLATION AND EXTERNAL DEBT

    arminfo
    July 26, 17:04

    Eurasian Development Bank has prepared Macromonitor of the CIS
    countries, in which it assessed and predicted their macroeconomic
    development.

    According to the monitor, the GDP in the CIS countries may grow by
    4,5% in 2011 and by 4,53% in 2012. The economy of the Central Asia
    occupies the leading positions - Turkmenistan (9,3%), Uzbekistan
    (7,8%), Tajikistan (6,1%), Kazakhstan (5,9%) and Kyrgyzia (5,7%).

    The economy of Russia and Ukraine will grow by 4,5%, Armenia - 4,3%,
    Moldova - 4,1% and Azerbaijan - 3,9%.

    The indicator of the economic activeness in Armenia in March 2011
    versus March 2010 amounted to 0.3%. The economic production grew by
    5.9%, including in the mining branch - by 2.3%, in processing - 3.8%.

    Trade grew by 5%. Slowdown was noticed in the rest branches of
    economy. The service sphere, which has a big share in the GDP,
    reduced by 7,3%. The construction volume also decreased by 5,2%.

    The unprecedented slowdown in the sphere of agriculture fixed in
    2010 (13.5%), continued this year as well. The volume of agriculture
    production reduced by 2% in the 1Q 2011.

    The consumption has again become the driver of growth. Import of
    goods grew by 6,8%, the biggest share of which were mineral products
    (21.2%)as well as motors and equipment (12.9%).

    As against the 1Q 2010, the state budget revenues grew by 9%, 94.9% of
    which at the expense of the tax revenues, state taxes and payments for
    obligatory social insurance, 5% - at the expense of other profits and
    0.1% - of social grants. The expenses grew by 6,6% over the reported
    period. So, the budget deficit was fixed at 2,4 bln drams.

    The external debt of Armenia grew by 32,2% in 2010. The debt of the
    government reached $2.7 bln and the debt of Central Bank - $699 mln.

    In general, the aggregate debt of Armenia, including internal and
    external amounted to $6.2 bln by the end of 2010. Despite high indices
    of the ratio of external debt to GDP (about 67% by the end of 2010),
    Armenia continues getting credits and looking for the new ones.

    This will lead to further growth of external debt and to dependence
    of the economy on external funds.

    According to the results of 1Q 2011, the inflation level in Armenia
    was the highest among the CIS countries - 11.5%. The prices for
    food products grew by 17.1%. As a result of the inflation pressure,
    Armenian Central Bank increased the re-financing rate by 1.25% in
    2011. It is expected that high proces for food and the growth of the
    state expenditure will continue making the inflation pressure over
    the current year. For this reason, hardening of the monetary policy
    will play a great part for supporting of stability of the local prices.

    The index of the economic activeness of Armenia in April of the
    current year grew by 7,7% as against April 2010. The volume
    of industrial production grew by 11% in April. International
    institutes of development predict the GDP growth in Armenia by
    3,5%-4,6%. The acceleration of reforms directed to improvement of
    business-environment, tax sphere as well as development of the local
    currency, the capital markets and the export growth will promote
    further growth of economy in Armenia.

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