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ECONOMY IN 2014: SLOWER GROWTH, CURRENCY MARKET UPHEAVALS, EURASIAN INTEGRATION
ECONOMY | 26.12.14 | 11:06
http://armenianow.com/economy/59650/armenia_2014_economy_events
RELATED NEWS
Price Watch: Dram rebounds, inflation worries linger
Parliament majority approves 2015 state budge
Price Hike for Power: PSRC decision causes public discontent
In 2014, despite the change of the so-called 'economic unit' ministers
in the government, the economic state of the country did not change
much, while the end of the year was marked by a currency market turmoil
when the dram lost its grounds to major international currencies and
price hikes were observed in the country.
In October, the International Monetary Fund (IMF) decreased Armenia's
economic growth forecast from 4.3 to 2.6 because of the economic
challenges Armenia is facing.
In December, the dram began to quickly devaluate against the dollar,
and the greenback, for a moment, was king again at exchange offices.
Taking advantage of the dramatic currency exchange rate fluctuations
some Armenian retailers raised prices for basic foodstuffs and other
essentials that fueled concerns and even created some panic among
citizens.Within a week prices for some goods increased by up to 40
percent. They started to lower shortly as the dram rebounded but
still remained relatively high.
In early December the Armenian National Assembly voted 71 to 46,
without abstentions, to approve the 2015 state budget; all factions,
except the ruling Republican Party of Armenia, voted against the bill.
Remarkably, the budget is based on the assumption that the average
exchange rate of the dram in 2015 will be at the level of 413 drams
per U.S. dollar. By the end of the year, however, the dram already
traded at 440-460 per US$.
And despite numerous criticism and negative predictions of experts that
the Eurasian Economic Union (EEU) is not a profitable structure for
Armenia, in 2015 Armenia will already be a member of the trade bloc.
In 2014 Negotiations on Armenia's joining the Eurasian Economic
Union (EEU) reached the final stage and the list of goods exempt
from duties was agreed upon, however the most conflicting point -
a possible customs check-point at the border between Armenia and
Nagorno-Karabakh still remains unclear to many.
The controversial compulsory element in the funded pension law was one
of the most controversial issues during the pension reform enforced
in 2014. Civil activists' protests and a Constitutional Court ruling
partly sustaining the claims of several opposition parties that
the pension reform law is unconstitutional made Armenia's recently
appointed Prime Minister Hovik Abrahamyan agree to a compromise option
for the reform to continue.
The PM's compromised formula "compulsory but not forced" for the
reform, however, remained vague for many, though the wave of discontent
calmed down gradually as the norm became applicable only for public
sector workers.
Despite public protests against the rise in electricity tariffs the
Public Services Regulatory Commission (PSRC) approved a 10-percent
raise from August 1.
Another protest by small and medium-sized entrepreneurs led to the
postponement of the application of some of the new provisions of a law
on sales tax. While under the provisions for small and medium-sized
enterprises sales taxes are reduced from 3.5 to 1 percent, most
businessmen did not want the current norm to change fearing increased
paper work and pressure from tax bodies.
Armenia has slipped by six points to 85th place among 144 countries
in the Global Competitiveness Report 2014, but moved four positions up
in the latest Doing Business index released by the World Bank. On the
list of 189 nations Armenia occupies 45th place as opposed to its 49th
"Ease of Doing Business" rank in the previous edition of the report.
The government of Armenia and the U.S. Company ContourGlobal signed
an agreement regarding the purchase of the Vorotan Hydro Cascade.
The long-awaited tablet of Armenian make became a reality in early
2014.
High-tech guru and author of a number of innovations in
microelectronics, Chief Development Officer of Sysco Systems, Inc.,
Mario Mazzola received the Armenian President's 2014 Global IT
(GIT) Award.
All three mobile operators in Armenia launched the Mobile Number
Portability (MNP) service beginning on April 1.
ECONOMY | 26.12.14 | 11:06
http://armenianow.com/economy/59650/armenia_2014_economy_events
RELATED NEWS
Price Watch: Dram rebounds, inflation worries linger
Parliament majority approves 2015 state budge
Price Hike for Power: PSRC decision causes public discontent
In 2014, despite the change of the so-called 'economic unit' ministers
in the government, the economic state of the country did not change
much, while the end of the year was marked by a currency market turmoil
when the dram lost its grounds to major international currencies and
price hikes were observed in the country.
In October, the International Monetary Fund (IMF) decreased Armenia's
economic growth forecast from 4.3 to 2.6 because of the economic
challenges Armenia is facing.
In December, the dram began to quickly devaluate against the dollar,
and the greenback, for a moment, was king again at exchange offices.
Taking advantage of the dramatic currency exchange rate fluctuations
some Armenian retailers raised prices for basic foodstuffs and other
essentials that fueled concerns and even created some panic among
citizens.Within a week prices for some goods increased by up to 40
percent. They started to lower shortly as the dram rebounded but
still remained relatively high.
In early December the Armenian National Assembly voted 71 to 46,
without abstentions, to approve the 2015 state budget; all factions,
except the ruling Republican Party of Armenia, voted against the bill.
Remarkably, the budget is based on the assumption that the average
exchange rate of the dram in 2015 will be at the level of 413 drams
per U.S. dollar. By the end of the year, however, the dram already
traded at 440-460 per US$.
And despite numerous criticism and negative predictions of experts that
the Eurasian Economic Union (EEU) is not a profitable structure for
Armenia, in 2015 Armenia will already be a member of the trade bloc.
In 2014 Negotiations on Armenia's joining the Eurasian Economic
Union (EEU) reached the final stage and the list of goods exempt
from duties was agreed upon, however the most conflicting point -
a possible customs check-point at the border between Armenia and
Nagorno-Karabakh still remains unclear to many.
The controversial compulsory element in the funded pension law was one
of the most controversial issues during the pension reform enforced
in 2014. Civil activists' protests and a Constitutional Court ruling
partly sustaining the claims of several opposition parties that
the pension reform law is unconstitutional made Armenia's recently
appointed Prime Minister Hovik Abrahamyan agree to a compromise option
for the reform to continue.
The PM's compromised formula "compulsory but not forced" for the
reform, however, remained vague for many, though the wave of discontent
calmed down gradually as the norm became applicable only for public
sector workers.
Despite public protests against the rise in electricity tariffs the
Public Services Regulatory Commission (PSRC) approved a 10-percent
raise from August 1.
Another protest by small and medium-sized entrepreneurs led to the
postponement of the application of some of the new provisions of a law
on sales tax. While under the provisions for small and medium-sized
enterprises sales taxes are reduced from 3.5 to 1 percent, most
businessmen did not want the current norm to change fearing increased
paper work and pressure from tax bodies.
Armenia has slipped by six points to 85th place among 144 countries
in the Global Competitiveness Report 2014, but moved four positions up
in the latest Doing Business index released by the World Bank. On the
list of 189 nations Armenia occupies 45th place as opposed to its 49th
"Ease of Doing Business" rank in the previous edition of the report.
The government of Armenia and the U.S. Company ContourGlobal signed
an agreement regarding the purchase of the Vorotan Hydro Cascade.
The long-awaited tablet of Armenian make became a reality in early
2014.
High-tech guru and author of a number of innovations in
microelectronics, Chief Development Officer of Sysco Systems, Inc.,
Mario Mazzola received the Armenian President's 2014 Global IT
(GIT) Award.
All three mobile operators in Armenia launched the Mobile Number
Portability (MNP) service beginning on April 1.