Economic News from Armenia‏

ARMENIAN GDP SHRINKS BY 16.3% IN H1InterfaxJuly 21 2009RussiaArmenia's GDP in January-June 2009 shrank, according to preliminarystatistics, by 16.3% year-on-year to 1.119 trillion dram, or $3.2billion, the National Statistics Service said.The decline was largely driven by a decrease in total construction by53.5% to 125 billion dram. The drop in the agriculture sector came to2.5% at 123.5 billion dram, manufacturing - 281.5 billion dram (down11.5%), electricity output - 2.788 billion kilowatt hours (down 10.6%)and services to the population - 340 billion dram (up 0.9%).Armenia's foreign trade in the first half dropped by 31.5% year-on-year to $1.6599 billion, or 578.8 billion dram. Exports fell by45.9% to $281.1 million while imports decreased by 27.5% to $1.379billion.It was earlier reported that that, in May of this year, the CentralBank of Armenia forecast that the country's economy would decline by5.8% in 2009. At the start of June, the deputy chair of the CentralBank, Vache Gabrielyan, produced a renewed GDP forecast that putthe decrease at 7%-8%. At the end of June, the IMF increased its GDPdecline forecast from 5% to 9.5%.Official rate of the dram on July 21 - 365.55 dram/$1.

ARMENIA'S ECONOMIC DECLINE CONTINUES Ruben MeloyanLibertyhttp://www.azatutyun.am/content/article/1783079.htmlJuly 22 2009ArmeniaArmenia's economy has continued to decline for the sixth consecutivemonth this year, according to the preliminary data released by theNational Statistics Service.The data show the country's Gross Domestic Product contracting by16.3 percent in the first half of this year. The Armenian economycontracted by 15.7 percent in January-May 2009. It was growing atdouble-digit rates as recently as in September, just before theoutbreak of the global financial crisis.The economy was primarily dragged down by the construction slump,which was down by as much as 54.5 percent in January-June from thesame period of 2008. The more-than-threefold month-on-month growthreported in Armenia's once booming construction sector in June didnot resulted in a dramatic reversal of macroeconomic statistics.Prime Minister Tigran Sarkisian told the Kapital business daily thatthe deepening of the economic decline in the first half of the yearwas not an unexpected development for the government."We have said before the publication of the figures that a higheconomic growth was registered during the six months of last year,as a result of which the decline during the same period of this yearwould be steep," said Sarkisian.Earlier this month Sarkisian said that he saw at least three scenariosof developments for the economy in 2009 and did not exclude that theeconomy could contract by as much as 20 percent this year."From now on, we need to consider at least three scenarios ofdevelopments," Sarkisian said during an international economic forumin Yerevan on July 7. "One is that we will have a [GDP] declineof 9.5 percent; the second one is that it will make up 16 percent;and the third one is that we will have a 20 percent decline."According to former Central Bank Chairman Bagrat Asatrian, thecontinuing decline in Armenia's economy reveals the ineffectivenessof government actions."Today we bear the consequences of the failure of the governmentto make decisions in the middle of last year. The government mustapologize that we now live by a program that envisages a 9 percenteconomic growth," Asatrian told RFE/RL.The economist, however, said the economic decline could slow down bythe end of the year."One of the factors is the inflow of large financial means, whichwill somewhat redress the situation in construction," said Asatrian,predicting an overall economic decline in 2009 at 13-14 percent.According to the data reported for the first six months of 2009,imports exceeded exports in Armenia almost five times and the negativebalance of trade totaled more than $1 billion.Asatrian called the situation 'alarming', considering the sharpincrease of Armenia's foreign debt in the past several months."As a result of this year we will have a foreign debt that will exceedour exports about three or four times. This is already a terriblething. In fact, we are supposed to clear our debts by borrowing. Wemay borrow from foreign countries or from our compatriots abroad inthe form of cash remittances. These remittances, however, are notmoney that we earn," said Asatrian.Artur Stepanian, head of the Central Bank's Monetary Policy Department,said that forecasts about a tangible reduction of cash remittanceswere made still last year."At the end of last year and at the beginning of this year we assessedthat a 30 percent reduction in cash remittances would take place. Theforecasts that we made about seven months ago have come true," he said.Stepanian also said that a large decrease in direct capital investmentshas caused steep declines in both construction and industry."The economic has hit the bottom and after staying at this level fora month or two it will enter the stage of recovery," Stepanian said.
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