GDP growth rate declining in Armenia

/AzerNews/

By Mushvig Mehdiyev

The Armenian government failed to achieve the target GDP growth this year. Economic crisis facing the country is recognized as the main impediment to general progress.

Deputy Finance Minister Pavel Safaryan said the scheduled 5.2 percent growth of GDP is not expected to succeed. The economic growth was calculated at 5.2 percent, while the inflation was expected to be about 4 percent, according to the 2014 state budget.

"Private money transfers to Armenia decreased by 25 percent due to economic sanctions imposed on Russia. Decrease of remittances directly affected the GDP growth. We forecasted it to be roughly 5.2 percent, but failed to achieve the figure because of the considerable decline in money transfers," Safaryan said.

The International Monetary Fund's experts have earlier predicted the economic growth to be nearly 4.6 percent in Armenia this year, being below the previous forecasts.

Safaryan noted that the money transfers to Armenia have sharply reduced, while the same trend is observed in the amount of investments and exports. "Instead of a 5.2 percent growth in economy, we could achieve it only by 3 percent. The overall negative impact on our economy is 2 percent," he added.

The Finance Ministry's statistical data reveals a hope to finish this year with about 3.3 percent index of the economic growth amid the deepening stagnation in the country.

Deadlock in Armenian economy is not a secret, as several influential monetary organizations and banks have repeatedly voiced the miserable economic atmosphere in the post-Soviet state.

The Eurasian Development Bank's latest forecast on Armenia's GDP growth was nearly 4.5 percent, while the Asian Bank reported about 3.8 percent economic upgrade in the small Caucasus country. Moody's disappointed the Armenian authorities with its 2.1 percent forecast for the post-Soviet nation's GDP growth. The two weighty banking institutions - the European Bank for Development and Reconstruction and the World Bank reported the economic growth in Armenia to be roughly 3 percent and 5 percent respectively this year.

Armenia's economy is strongly dependent on external factors. Money transfers from Russia decreased and added fuel to the desperate economic situation in the country. It shows that Armenia lacks the instinct of self-recovery due to the poor source of domestic and foreign reserves. The latest data revealed that the Armenian Central Bank's international reserves dropped by $550 million only in six months of this year to $557 million. The current amount of the overall international reserves is now below the recognized red line, posing a real threat to the country's economy.

The government has repeatedly failed to shore up the economic developments, making the people grapple with socio-economic challenges. The World Bank Data's latest report marks about 32.4 percent of the Armenian population as poor, while the New York-based Trading Economics, reports the unemployment rate to reach 18 percent in the former Soviet country.

These facts prove that the deadhead government is desperately looking for a magic wand instead of lending the people a helping hand. The "savior" magic wand is still at a loss and could be find one day. But what an "amputee" government can offer instead of the helping hand is a real conundrum to solve.