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ARMENIAN CONSUMER CONFIDENCE SLIPS IN Q1 BUT HOUSEHOLDS REMAIN RESILIENT.
Global Insight
April 18, 2013
by: Lilit Gevorgyan
The report by the Central Bank of Armenia (CBA) revealed that consumer
confidence deteriorated in the first quarter of 2013 mainly due to
households' concerns over the current state of the economy, their
shrinking real incomes and unemployment rate at 15.7% at end-2012. The
overall index dropped to 44 points from 45.6 points reported in the
last quarter of 2012. When compared to the first quarter of 2012 the
overall index was lower by 3.3 points in the first quarter of 2013.
All sub-indices measuring households' sentiment for business
environment and economic activity in the first quarter firmly
remained below 50 points, which according to the CBA's survey
methodology signals poor sentiment. However, households were more
upbeat about future developments, with the sub-indices measuring
household's expectations over the next 12 months remaining above
50, signifying positive territory. The quarterly survey includes
households, non-financial and financial institutions and measures
consumer sentiment on both current and future business environment
and economic activity.
A more detailed breakdown of the quarterly survey reveals that the
sub-index measuring the respondents' income fell by 8.5 points from
41.4 points to 32.9 points between the fourth and first quarters.
Furthermore, the overall index was hit by a four-point drop, from
26.7 to 22.7, in the sub-index measuring households' views on the
current state of the economy. In addition, the CBA survey reported that
Armenian consumers remained reluctant to undertake major purchases in
the first three months of 2013. However, encouragingly households'
expectations of income over the next 12 months have improved by 1
point, reaching 52.6 points in the first three months of 2013. The
respondents were less anxious about future employment prospects
as the corresponding sub-index rose by 2 points. Nevertheless,
households continue to have major concerns about future labour market
developments, which is risk to increased households willingness to
undertake major purchases over the next 12 months. Consequently,
the sub-index measuring this dropped by 1.8 points, but it remained
in positive territory standing at 55.1 in the first quarter of 2013.
Significance:The latest confidence survey provides further evidence
that the economy lost some growth momentum in the early months of
2013 (seeArmenia: 4 April 2013:). Following a surprise annual real
GDP growth of 7.2% in 2012, which surpassed the government's growth
target, the overall economic activity in 2013 is likely to slow as
a result of a more difficult external environment. Consequently,
the government's official 2013 growth target of 6.3% could be too
ambitious. More encouragingly, the latest survey suggests that despite
Armenian consumers' downbeat view of the country's current economic
performance, their views on their future employment prospects and
income are more resilient. This is likely to maintain the strong
upward trend in household demand with domestic retail trade posting
6.7% y/y growth in January-February 2013, and suggests that consumer
spending is likely to remain an important engine of growth during
the year as a whole.
From: A. Papazian
Global Insight
April 18, 2013
by: Lilit Gevorgyan
The report by the Central Bank of Armenia (CBA) revealed that consumer
confidence deteriorated in the first quarter of 2013 mainly due to
households' concerns over the current state of the economy, their
shrinking real incomes and unemployment rate at 15.7% at end-2012. The
overall index dropped to 44 points from 45.6 points reported in the
last quarter of 2012. When compared to the first quarter of 2012 the
overall index was lower by 3.3 points in the first quarter of 2013.
All sub-indices measuring households' sentiment for business
environment and economic activity in the first quarter firmly
remained below 50 points, which according to the CBA's survey
methodology signals poor sentiment. However, households were more
upbeat about future developments, with the sub-indices measuring
household's expectations over the next 12 months remaining above
50, signifying positive territory. The quarterly survey includes
households, non-financial and financial institutions and measures
consumer sentiment on both current and future business environment
and economic activity.
A more detailed breakdown of the quarterly survey reveals that the
sub-index measuring the respondents' income fell by 8.5 points from
41.4 points to 32.9 points between the fourth and first quarters.
Furthermore, the overall index was hit by a four-point drop, from
26.7 to 22.7, in the sub-index measuring households' views on the
current state of the economy. In addition, the CBA survey reported that
Armenian consumers remained reluctant to undertake major purchases in
the first three months of 2013. However, encouragingly households'
expectations of income over the next 12 months have improved by 1
point, reaching 52.6 points in the first three months of 2013. The
respondents were less anxious about future employment prospects
as the corresponding sub-index rose by 2 points. Nevertheless,
households continue to have major concerns about future labour market
developments, which is risk to increased households willingness to
undertake major purchases over the next 12 months. Consequently,
the sub-index measuring this dropped by 1.8 points, but it remained
in positive territory standing at 55.1 in the first quarter of 2013.
Significance:The latest confidence survey provides further evidence
that the economy lost some growth momentum in the early months of
2013 (seeArmenia: 4 April 2013:). Following a surprise annual real
GDP growth of 7.2% in 2012, which surpassed the government's growth
target, the overall economic activity in 2013 is likely to slow as
a result of a more difficult external environment. Consequently,
the government's official 2013 growth target of 6.3% could be too
ambitious. More encouragingly, the latest survey suggests that despite
Armenian consumers' downbeat view of the country's current economic
performance, their views on their future employment prospects and
income are more resilient. This is likely to maintain the strong
upward trend in household demand with domestic retail trade posting
6.7% y/y growth in January-February 2013, and suggests that consumer
spending is likely to remain an important engine of growth during
the year as a whole.
From: A. Papazian