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Global Insight
May 3, 2011
Armenian GDP Growth Sags, Exports Still Vigorous in March
BYLINE: Venla Sipila
The newly introduced monthly indicator of economic activity by the
Armenian National Statistical Service suggests annual expansion of
just 0.3% for March. This gain marks some further deceleration
compared with the revised February growth rate of 0.9% year-on-year
(y/y), which had represented notable weakening in performance after
the January growth rate of 6.1% y/y. In month-on-month (m/m) terms,
the economy expanded by a rapid rate of 18.5% in March. Although total
output still managed a positive annual growth rate, further details
from the Statistical Service show that agricultural production
suffered a contraction of 2% y/y. Industrial output increased by 5.9%
y/y, while construction activity contracted by 5.2% y/y. Domestic
trade increased by 5% from the same month a year earlier, but other
service sectors saw supply clearly decrease in annual comparison.
Meanwhile, external trade figures show that exports in March soared by
21.8% y/y, still a strong gain even if growth slowed from the 32.0%
y/y surge seen in February. Import growth accelerated to 12.2% y/y,
following a gain of 7.2% y/y in February.
Significance:Armenian recovery momentum has started to weaken, even if
exports still enjoy a clear boost from high global commodity prices
that benefit the mining sector. This is also reflected in relatively
robust industrial growth. Assuming a recovery in agricultural output
following the devastating agricultural contraction last year, and
persistently fairly robust industrial and export performance in the
near term, annual growth should not remain on any persistent weakening
path. Then again, as reflected in the overall weakness of the service
sector, momentum of domestic demand still remains muted. The
government's official growth projection of 4.6% for 2011 stands
subject to some downward risks, especially given the fragility of the
global recovery together with the increased Armenian inflation
expectations. Meanwhile, despite the recent improvement, the trade
deficit still is wide enough to present a key source of vulnerability
for the economy. Imports are partly surging due to demand for
industrial goods, for example for the important mining sector, but
Armenia also still imports a significant amount of consumption goods,
including food.
From: A. Papazian
May 3, 2011
Armenian GDP Growth Sags, Exports Still Vigorous in March
BYLINE: Venla Sipila
The newly introduced monthly indicator of economic activity by the
Armenian National Statistical Service suggests annual expansion of
just 0.3% for March. This gain marks some further deceleration
compared with the revised February growth rate of 0.9% year-on-year
(y/y), which had represented notable weakening in performance after
the January growth rate of 6.1% y/y. In month-on-month (m/m) terms,
the economy expanded by a rapid rate of 18.5% in March. Although total
output still managed a positive annual growth rate, further details
from the Statistical Service show that agricultural production
suffered a contraction of 2% y/y. Industrial output increased by 5.9%
y/y, while construction activity contracted by 5.2% y/y. Domestic
trade increased by 5% from the same month a year earlier, but other
service sectors saw supply clearly decrease in annual comparison.
Meanwhile, external trade figures show that exports in March soared by
21.8% y/y, still a strong gain even if growth slowed from the 32.0%
y/y surge seen in February. Import growth accelerated to 12.2% y/y,
following a gain of 7.2% y/y in February.
Significance:Armenian recovery momentum has started to weaken, even if
exports still enjoy a clear boost from high global commodity prices
that benefit the mining sector. This is also reflected in relatively
robust industrial growth. Assuming a recovery in agricultural output
following the devastating agricultural contraction last year, and
persistently fairly robust industrial and export performance in the
near term, annual growth should not remain on any persistent weakening
path. Then again, as reflected in the overall weakness of the service
sector, momentum of domestic demand still remains muted. The
government's official growth projection of 4.6% for 2011 stands
subject to some downward risks, especially given the fragility of the
global recovery together with the increased Armenian inflation
expectations. Meanwhile, despite the recent improvement, the trade
deficit still is wide enough to present a key source of vulnerability
for the economy. Imports are partly surging due to demand for
industrial goods, for example for the important mining sector, but
Armenia also still imports a significant amount of consumption goods,
including food.
From: A. Papazian