Armenian Economic News
NEWS BRIEFS
ARMENIA: ARMENIAN ECONOMY DROPS BY ALMOST 16 PERCENT
8/05/09
Despite tens of millions of dollars in foreign aid received earlier
this year, the Armenian economy from January through May of 2009
experienced a 15.7 percent decline compared with the same period last
year, according to the National Statistics Service of Armenia.
Armenia's National Bank had predicted that the economy would dip at a
12-15 percent annual rate, the Tert news service reported on August
4. The National Bank adjusted its forecasts several times throughout
the year as Armenia's recession deepened. Slow sales in construction
and services are driving the downward trend.
GDP now stands at 839 billion drams, or roughly $2.27 billion, a 15.7
percent drop from the same period in 2008.
Posted August 5, 2009 © Eurasianet
ARMENIA: ARMENIAN ECONOMY DROPS BY ALMOST 16 PERCENT
8/05/09
Despite tens of millions of dollars in foreign aid received earlier
this year, the Armenian economy from January through May of 2009
experienced a 15.7 percent decline compared with the same period last
year, according to the National Statistics Service of Armenia.
Armenia's National Bank had predicted that the economy would dip at a
12-15 percent annual rate, the Tert news service reported on August
4. The National Bank adjusted its forecasts several times throughout
the year as Armenia's recession deepened. Slow sales in construction
and services are driving the downward trend.
GDP now stands at 839 billion drams, or roughly $2.27 billion, a 15.7
percent drop from the same period in 2008.
Posted August 5, 2009 © Eurasianet
RAPID DEFLATION SEEN IN ARMENIA IN JULY
Venla Sipila
World Markets Research Centre
Aug 4 2009
According to the latest inflation data from the National Statistical
Service of Armenia, consumer prices in July fell by 2.7% month-on-month
(m/m) in July. This result compares to a more modest deflation rate
of 0.3% m/m seen in June, and to an inflation rate of 1.6% m/m posted
in May. As expected, the decrease in consumer prices was led by a
sharp fall in food costs, which eased by 5.7% from June. Conversely,
prices of non-food goods rose by 0.5% m/m and service charges inched
up by 0.1% m/m. Measured year-on-year (y/y), Armenian consumer prices
increased by 3.1% in July, after gaining 3.6% y/y in June, 3.4% y/y
in May and 3.1% y/y in May. The annual inflation rate for the whole
January-July period was reported at 2.7%, while consumer prices rose
by 2.4% in cumulative terms over the first seven months of 2009.
Significance:While the clear fall in prices in m/m terms is due
in large part to seasonal effects from food price developments,
the return to moderation in annual price growth is welcome. After
early 2009 saw inflation pressures subside sharply, they started
to strengthen again from March, after the devaluation of the dram
exchange rate seen earlier in the month, while the April jump in
inflation was mainly attributed to the increase in import prices
of Russian gas (seeArmenia: 1 May 2009:). With inflation below the
upper band of the target rate, the Central Bank of Armenia (CBA)
has enacted several interest rate cuts recently (seeArmenia: 8 July
2009:). The boosting impact on service prices form the gas price rise
is likely to keep having an upward effect on annual inflation in the
coming months, but the overall sharp cooling in economic activity
will have the opposite effect. Then again, the potential of sharp
renewed upward price pressures still cannot be written off, given the
vulnerability of the dram exchange rate amid Armenia's high external
financing requirements.
Venla Sipila
World Markets Research Centre
Aug 4 2009
According to the latest inflation data from the National Statistical
Service of Armenia, consumer prices in July fell by 2.7% month-on-month
(m/m) in July. This result compares to a more modest deflation rate
of 0.3% m/m seen in June, and to an inflation rate of 1.6% m/m posted
in May. As expected, the decrease in consumer prices was led by a
sharp fall in food costs, which eased by 5.7% from June. Conversely,
prices of non-food goods rose by 0.5% m/m and service charges inched
up by 0.1% m/m. Measured year-on-year (y/y), Armenian consumer prices
increased by 3.1% in July, after gaining 3.6% y/y in June, 3.4% y/y
in May and 3.1% y/y in May. The annual inflation rate for the whole
January-July period was reported at 2.7%, while consumer prices rose
by 2.4% in cumulative terms over the first seven months of 2009.
Significance:While the clear fall in prices in m/m terms is due
in large part to seasonal effects from food price developments,
the return to moderation in annual price growth is welcome. After
early 2009 saw inflation pressures subside sharply, they started
to strengthen again from March, after the devaluation of the dram
exchange rate seen earlier in the month, while the April jump in
inflation was mainly attributed to the increase in import prices
of Russian gas (seeArmenia: 1 May 2009:). With inflation below the
upper band of the target rate, the Central Bank of Armenia (CBA)
has enacted several interest rate cuts recently (seeArmenia: 8 July
2009:). The boosting impact on service prices form the gas price rise
is likely to keep having an upward effect on annual inflation in the
coming months, but the overall sharp cooling in economic activity
will have the opposite effect. Then again, the potential of sharp
renewed upward price pressures still cannot be written off, given the
vulnerability of the dram exchange rate amid Armenia's high external
financing requirements.
Asbarez
Aug 6, 2009
YEREVAN (RFE/RL)-The government formalized on Thursday its extremely
ambitious plans to seek more than $1 billion in external funding for
the expansion and upgrading of Armenia's key highways which it says
would turn the country into a regional transit hub.
The government ordered relevant regional authorities to halt any
construction along hundreds of miles of roads stretching from northwest
the Armenian-Iranian border to Georgia. It also approved funding for
the first feasibility study on the project which it hopes will be
financed by the Manila-based Asian Development Bank (ADB).
"We are launching a big process of road construction," Prime Minister
Tigran Sargsyan said at a weekly session of his cabinet. "North-South
highway will meet the highest international standards," he told
ministers.
Sargsyan estimated the total cost of the project at roughly $1.5
billion, a sum worth more than half of Armenia's state budget
for this year. He said the Armenian government has already asked
the ADB for a $700 million loan to finance the first phase of road
reconstruction. The bank's governing board will consider the request
when it meets next month, he added.
Transport and Communications Minister Gurgen Sargsian said last month
that Yerevan and the ADB are already negotiating on the release of
$1 million in funding for the comprehensive feasibility studies on
the project.
"The project enables us to play a serious transit role in the region,"
he told journalists. "So it's not an Armenian project, it's a regional
project."
Sargsian said that neighboring Iran would find it much easier to use
Armenian territory for cargo shipments to and from Georgia and other
countries. He also stressed that the upgraded roads would connect
to a highway in southern Georgia leading to the Black Sea ports of
Batumi and Poti.
The Armenian and Georgian governments agreed last year to jointly
seek external assistance for rebuilding that highway and thereby
significantly shortening travel between Armenia and the Georgian Black
Sea coast. The issue was on the agenda of Georgian President Mikheil
Saakashvili's recent visit to Yerevan. Sarkisian said afterwards that
the ADB has agreed in principle to finance the project.
The bank was already approached by the Yerevan government last year
over the financing of an even more ambitious project to build a
railway connecting Armenia and Iran. Expert says its implementation
would cost more than $1 billion.
The figure pales in comparison with at least $5 billion need for the
construction of a new reactor at the Metsamor nuclear power plant
planned by the government. The latter insists that foreign investors
have shown an interest in the project. But it has still not named
any of them.
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