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What Is Awaiting Armenian Economy?
Roza Hovhannisyan, Reporter
Comments - 04 April 2015, 18:56
The economists say the pessimistic economic forecasts of the World
Bank for Armenia are quite realistic, considering the existing
situation.
Note that the World Bank has recently forecast a zero economic growth
this year, and economic recession in case of shocks. "The World Bank
representative broke the news, saying - dear Armenian people, a very
difficult year is expected, and do take relevant measures. However,
our people have no opportunities to take such measures, those are in
the hands of the government while the government is not doing
anything," the economist Vahagn Khachatryan said in an interview with
Lragir.am.
He recalls that prior to the World Bank's country manager, the Central
Bank of Armenia had announced that the economic situation is causing
concerns, forecasting a 0.4-2% growth provided the negative economic
signals from the Russian economy. This forecast is based on the
dropping amount of remittances from Russia to Armenia.
Vahagn Khachatryan says remittances from Russia are down by 45%,
forecasts on the economy of this country have improved recently but
the economy is expected to contract by 3-4% this year. By the best
broadcast, a 2% growth will be expected in Russia only in 2017.
"In other words, the forecasts were made in Russia but we do not visit
them in any way. Russia revised its budget, cut government
expenditures by 17%, suspended or cut investments. Three months have
passed but we are not doing anything. Who are we waiting for? Are we
waiting for someone to come and get the economy working with a magic
stick?" he says.
According to the economist, the existing situation is similar to the
crisis year of 2009, i.e. recession, increase of poverty, rise in
unemployment, problem with tax collections. The difference between
today and 2009 is then it was possible to borrow to reduce social
tension. Today we cannot boost the national debt because Armenia is
already close to the red line.
"This situation was visible after the second half of 2014 when
negative tendencies were noticed," the economist notes. He believes
that aside from external factors, there are also internal problems,"
the economist says. Having boosted the foreign debt since 2009, we
have not achieved economic success. I still cannot understand the
direction of development of our economy, he notes. Armenia went
through different terminologies, including economic diversification,
becoming a world financial center, tourism center, but no clarity
ever. Armenia has arrived at this by resolving situational problems.
"At this point the second problem has occurred - the state of the
Russian economy. We depend on the Russian economy, only remittances
are enough. The World Bank noted that Armenia is in top ten by a high
ratio to remittances to the GDP. Remittances are 21% of our GDP. In
other words, it was clear that if the situation in Russia got worse,
our economy would appear in a far more difficult situation," he
underlined.
Vahagn Khachatryan says the issue of monopolies is pending since 2009.
In 2012 the World Bank carried out a serious study. However, the
government never admits that there are monopolies in Armenia or
considers it normal, explaining that the Armenian economy is too
small. However, according to the economist, it is not a true judgment
because the size of the economy has nothing to do with monopolies.
"In other words, the problems were not resolved, and we faced shortage
of financial flows, limitations to the national debt," he notes.
The economist Vardan Bostanjyan also believes that the World Bank's
forecast will be realistic.
"In fact, at the moment the economic activity, movement and relations
in Armenia do not let hope for having something like growth,"
Bostanjyan says.
According to him, in economic collapse economic growth is not
possible. The Armenian government is not undertaking urgent measures,
which Vardan Bostanjyan interprets in the following way: "In our
system of governance I cannot see efforts by any branch of power. Most
probably, the system is such that the branches of the government are
deprived of initiatives."
There is one solution to the existing situation - govern the country,
don't let it unattended.
http://www.lragir.am/index/eng/0/comments/view/33884
Roza Hovhannisyan, Reporter
Comments - 04 April 2015, 18:56
The economists say the pessimistic economic forecasts of the World
Bank for Armenia are quite realistic, considering the existing
situation.
Note that the World Bank has recently forecast a zero economic growth
this year, and economic recession in case of shocks. "The World Bank
representative broke the news, saying - dear Armenian people, a very
difficult year is expected, and do take relevant measures. However,
our people have no opportunities to take such measures, those are in
the hands of the government while the government is not doing
anything," the economist Vahagn Khachatryan said in an interview with
Lragir.am.
He recalls that prior to the World Bank's country manager, the Central
Bank of Armenia had announced that the economic situation is causing
concerns, forecasting a 0.4-2% growth provided the negative economic
signals from the Russian economy. This forecast is based on the
dropping amount of remittances from Russia to Armenia.
Vahagn Khachatryan says remittances from Russia are down by 45%,
forecasts on the economy of this country have improved recently but
the economy is expected to contract by 3-4% this year. By the best
broadcast, a 2% growth will be expected in Russia only in 2017.
"In other words, the forecasts were made in Russia but we do not visit
them in any way. Russia revised its budget, cut government
expenditures by 17%, suspended or cut investments. Three months have
passed but we are not doing anything. Who are we waiting for? Are we
waiting for someone to come and get the economy working with a magic
stick?" he says.
According to the economist, the existing situation is similar to the
crisis year of 2009, i.e. recession, increase of poverty, rise in
unemployment, problem with tax collections. The difference between
today and 2009 is then it was possible to borrow to reduce social
tension. Today we cannot boost the national debt because Armenia is
already close to the red line.
"This situation was visible after the second half of 2014 when
negative tendencies were noticed," the economist notes. He believes
that aside from external factors, there are also internal problems,"
the economist says. Having boosted the foreign debt since 2009, we
have not achieved economic success. I still cannot understand the
direction of development of our economy, he notes. Armenia went
through different terminologies, including economic diversification,
becoming a world financial center, tourism center, but no clarity
ever. Armenia has arrived at this by resolving situational problems.
"At this point the second problem has occurred - the state of the
Russian economy. We depend on the Russian economy, only remittances
are enough. The World Bank noted that Armenia is in top ten by a high
ratio to remittances to the GDP. Remittances are 21% of our GDP. In
other words, it was clear that if the situation in Russia got worse,
our economy would appear in a far more difficult situation," he
underlined.
Vahagn Khachatryan says the issue of monopolies is pending since 2009.
In 2012 the World Bank carried out a serious study. However, the
government never admits that there are monopolies in Armenia or
considers it normal, explaining that the Armenian economy is too
small. However, according to the economist, it is not a true judgment
because the size of the economy has nothing to do with monopolies.
"In other words, the problems were not resolved, and we faced shortage
of financial flows, limitations to the national debt," he notes.
The economist Vardan Bostanjyan also believes that the World Bank's
forecast will be realistic.
"In fact, at the moment the economic activity, movement and relations
in Armenia do not let hope for having something like growth,"
Bostanjyan says.
According to him, in economic collapse economic growth is not
possible. The Armenian government is not undertaking urgent measures,
which Vardan Bostanjyan interprets in the following way: "In our
system of governance I cannot see efforts by any branch of power. Most
probably, the system is such that the branches of the government are
deprived of initiatives."
There is one solution to the existing situation - govern the country,
don't let it unattended.
http://www.lragir.am/index/eng/0/comments/view/33884