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MONTHLY INDEX SIGNALS SOME REACCELERATION OF ARMENIAN GROWTH IN SEPTEMBER, BUT RISKS TO REMITTANCES CLOUD OUTLOOK
IHS Global Insight
November 11, 2014
by Venla Sipila
The latest indicator of economic activity published by Armenia's
National Statistical Service puts expansion in September at 5.1% year
on year (y/y), following growth of 4.2% y/y in August and 7.2% y/y in
July. Cumulative growth since the beginning of the year was reported
at 4.3%. The Statistical Service also reported that agricultural
output in September increased by an accelerated rate of 11.7% y/y,
and climbed by 6.9% during the January-September period. Meanwhile,
the volume of industrial output in September recovered to show growth
of 7.5% y/y, but the weakness seen earlier in the year, especially in
the first quarter, left the cumulative expansion over the first three
quarters of the year at just 1.7%. On the other hand, construction
activity in September collapsed by 13% y/y, resulting in a cumulative
fall of 2.4% over the year so far.
Furthermore, it was reported that the volume of domestic trade
turnover in September rose by 2.4% y/y, and increased by 5.2%
during January-September. Finally, other services in September held
on to their double-digit growth seen during the third quarter,
as the September increase of 10.8% y/y brought the cumulative
January-September gain to 6.8%. Meanwhile, as reported by Interfax,
the Armenian finance ministry has lowered its growth forecast for this
year to 3%, significantly down from the previous projection of 5.2%.
The key driver of the forecast downgrade was the negative impact on
Armenia from the Russian economic struggles. First Deputy Finance
Minister Pavel Safaryan noted that weaker inflows of workers'
remittances have a negative impact on domestic consumption in Armenia.
In 2013, the Armenian economy expanded by 3.5%, while the latest
quarterly national accounts data had put second-quarter growth
in 2014 at 2.3% y/y, following a gain of 3.1% the previous quarter
(seeArmenia: 4 September 2014:Armenian Q2 growth suppressed by weakness
of construction sector as outlook is uncertain).
Significance:IHS has in recent months observed an increasing risk of
lower economic growth in Armenia, mainly due to the weaker outlook
for important workers' remittances from Russia, as also highlighted
by the finance ministry. Our latest GDP growth forecast for Armenia
in 2014 stand at around 4%, but downward risks to this outlook have
most recently increased. The construction sector still continues
performing very weakly. Even more importantly, the deteriorated
outlook for remittance inflows, by its negative impact on household
incomes, particularly clearly darkens the projections for domestic
trade and other services, which in recent data are among the best
performing sectors.
From: Baghdasarian
IHS Global Insight
November 11, 2014
by Venla Sipila
The latest indicator of economic activity published by Armenia's
National Statistical Service puts expansion in September at 5.1% year
on year (y/y), following growth of 4.2% y/y in August and 7.2% y/y in
July. Cumulative growth since the beginning of the year was reported
at 4.3%. The Statistical Service also reported that agricultural
output in September increased by an accelerated rate of 11.7% y/y,
and climbed by 6.9% during the January-September period. Meanwhile,
the volume of industrial output in September recovered to show growth
of 7.5% y/y, but the weakness seen earlier in the year, especially in
the first quarter, left the cumulative expansion over the first three
quarters of the year at just 1.7%. On the other hand, construction
activity in September collapsed by 13% y/y, resulting in a cumulative
fall of 2.4% over the year so far.
Furthermore, it was reported that the volume of domestic trade
turnover in September rose by 2.4% y/y, and increased by 5.2%
during January-September. Finally, other services in September held
on to their double-digit growth seen during the third quarter,
as the September increase of 10.8% y/y brought the cumulative
January-September gain to 6.8%. Meanwhile, as reported by Interfax,
the Armenian finance ministry has lowered its growth forecast for this
year to 3%, significantly down from the previous projection of 5.2%.
The key driver of the forecast downgrade was the negative impact on
Armenia from the Russian economic struggles. First Deputy Finance
Minister Pavel Safaryan noted that weaker inflows of workers'
remittances have a negative impact on domestic consumption in Armenia.
In 2013, the Armenian economy expanded by 3.5%, while the latest
quarterly national accounts data had put second-quarter growth
in 2014 at 2.3% y/y, following a gain of 3.1% the previous quarter
(seeArmenia: 4 September 2014:Armenian Q2 growth suppressed by weakness
of construction sector as outlook is uncertain).
Significance:IHS has in recent months observed an increasing risk of
lower economic growth in Armenia, mainly due to the weaker outlook
for important workers' remittances from Russia, as also highlighted
by the finance ministry. Our latest GDP growth forecast for Armenia
in 2014 stand at around 4%, but downward risks to this outlook have
most recently increased. The construction sector still continues
performing very weakly. Even more importantly, the deteriorated
outlook for remittance inflows, by its negative impact on household
incomes, particularly clearly darkens the projections for domestic
trade and other services, which in recent data are among the best
performing sectors.
From: Baghdasarian