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BAKU: "Apricot Republic" Armenia expects second wave of crisis

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  • BAKU: "Apricot Republic" Armenia expects second wave of crisis

    Trend, Azerbaijan
    Oct 22 2011


    "Apricot Republic" Armenia expects second wave of crisis


    22 October 2011, 09:00 (GMT+05:00) Trend European Desk Commentator
    Elmira Tariverdiyeva

    The fear experienced by the countries with weak economic systems is
    not alien to a small 'apricot republic like Armenia, blocked on two
    sides by insoluble arguments with its neighbours.

    Yerevan too, has learned from bitter experience of the impact of the
    financial crisis of 2008 and faces disappointing forecasts as the
    approaching wave of a second global economic collapse signals more
    destruction.

    Prime Minister Tigran Sargsyan recently recognised that matters could
    now come to a head in 2012. The Mediamax agency reported that the
    prime minister discussed this at a meeting of the EurAsEC Interstate
    Council in St. Petersburg.

    Of course Armenia reflects back to 'Black Tuesday' in April 2009 and
    Yerevan looks nervously at what the next financial disaster might do.

    The cause of the 2009 collapse was the Armenian Central Bank declaring
    a floating exchange rate of U.S. dollars which caused an unprecedented
    rush.

    The dollar cost 305-306 drams on Tuesday morning and was sold for 309.
    These figures increased to 350 and 390 drams in the afternoon,
    respectively. After the sharp fall of the Armenian currency, the
    prices on pharmaceuticals increased. A number of pharmacies in Yerevan
    closed and when they reopened, prices on medicines increased by 20 to
    30 per cent.

    After the collapse of the Armenia's national currency, the dram, the
    state deteriorated whilst prices on fuel, sugar, oil and other
    essential commodities increased.
    The memory of the terrible 'Black Tuesday' is supported by the current
    disappointing state of the Armenian economy. After the global crisis,
    it had not changed enough to help the country to overcome the negative
    impact of the second wave of recession.

    Mr Sargsyan was quoted as saying: "The world financial crisis
    significantly hit the construction industry in Armenia in 2009.

    "The decline was registered at 43 per cent, but the main issue of
    concern to us is a possible crisis expected in 2012. One should
    understand how it might affect our economy. Our consultations with the
    World Bank, International Monetary Fund and other international
    organisations do not give a clear answer to the question how the rest
    of the world will affect our economy."

    Of course, Prime Minister is cunning. Yerevan does not want to believe
    in the points designated to Armenia by the international financial
    institutions.

    In his recent interview with ARKA agency, member of delegation of EBRD
    Board of Directors Kurt Bayer answered all questions regarding the sad
    future of the Armenian economy.

    Stressing that the Armenian economy got a painful blow during the
    crisis, Bayer said that the economic recovery proceeds rather inertly.

    "This testifies to the fact that the economy has structural
    inefficiency," he said. "This made it very vulnerable given the
    negative development of the world economy."

    According to the EBRD representative, many potential foreign investors
    say that Armenia is perceived as a country with high level of
    corruption. The rule of law is not sufficient in the country and that
    people whose economic rights are violated, can not to seek protection
    in the court.

    All this means that the second wave of crisis may affect the economy
    of the apricot republic which has not recovered after the first wave
    of crisis. It is fragile because of isolation from all transportation
    projects in the region.

    There are all conditions that Prime Minister Sargsyan's anxiety justified.

    According to the Armenian National Statistical Service, consumer
    prices increased by 10.6 percent in Armenia in 2010. The largest price
    increase - 13.1 percent was registered for food, that is, the social
    welfare sector, without which it is impossible to do. Prices on
    industrial goods increased by 5.6 percent, tariffs for services - by
    4.2 percent.

    The poverty rate has already reached 35 percent. This made 60,000
    people to leave Armenia last year. The level of habitation continues
    reducing and threatens to turn into a revolution to overthrow the
    power. Moreover, the current power in Armenia does nothing to try and
    help people. As a result of the governmental policy and a lack of real
    market competition, small and medium facilities are closed. This
    significantly affects the public due to the increase in prices and the
    monopolization of the economy.

    In this situation, the second wave of crisis could be the last blow to
    the Armenian economy.




    From: A. Papazian
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