TODAY.AZ / World news

Int. agencies say Russia’s economic slump seriously affects Armenia

27 February 2015 [13:29] - TODAY.AZ

/By AzerNews/

By Mushvig Mehdiyev

Now that western powers have rolled a series of sanctions against Russia, Armenia finds itself in a tough economic spot, especially in the light of falling oil prices.

Since Armenia remains very much a satellite of the Russian economy, the country has faced increased economic and financial difficulties in the past months. An international consulting group warned that several countries in Central Asia will suffer severe economic repercussions as a result of their ties to Russia, namely Armenia.

Moscow-based Minchenko Consulting Communication Group developed a list of Russia-linked economies focusing primarily on their current and future problems.

Armenia is included in the list of nations to likely find itself under continuous challenges.

The global economic crisis and the devaluation of the Russian rubles have negatively affected post-Soviet countries, particularly those nations which heavily depend on Russia, said Charles Robertson, economist at the Renaissance Capital, a Britain-based research and management organization.

"Kazakhstan, Tajikistan, Armenia, Kyrgyzstan, Moldova will feel the strongest pain of the Russia's economic stagnation," he explained.

According to figures published by the World Bank, the fact that remittances from Russia continue to represent such a huge portion of several post-Soviet countries' economies will have a negative impact. For example, in Tajikistan, remittances from Russia represent 42 percent of the GDP, Moldova 25 percent and Armenia 21 percent.

Armenia emerged to be the most Russian dependent country of the South Caucasus region, where its neighbors - Georgia and Azerbaijan - respectively hold a 12 percent and 2.5 percent Russian remittance stake in their GDP.

The International Monetary Fund predicted post-Soviet countries to lose about $15 billion in total.

A slowdown in Russia's economic growth will gravely hit oil importer countries, including Armenia, Georgia, Kyrgyzstan and so on ... said Bank of America's Merrill Lynch financial institution.

The bank claims that a decrease by 1 percent in Russia's GDP could result in 5 percent fall in remittances to post-Soviet countries.

Merrill Lynch noted that Armenia remains vulnerable to external threats and risks.

According to international experts, the European crisis may, as a domino effect, pass on to countries that have bilateral trade with the European Union. This includes Russia as well, which is the main source of capital and financial transfer into Armenia.

This will of course further strain Armenia's economy and leave the country in a difficult situation.

With Russia straining under low oil prices, the flow of investments toward countries like Armenia will eventually dry out, leaving those economies exposed.

Merill Lynch said Armenians have never been skeptic about Russia's economy strength and as a result learned to depend on it.

Since Armenia has joined the Russia-led Eurasian Economic Union trade bloc, its economy faces increased exposure. Any negative economic development in Russia, the flagman of the union, will directly impact other member-states.

The Russian Economic Development Ministry forecasted in November 2013 that Russia’s GDP annual growth will be around 3.1 percent by 2020, 2.5 percent by 2020-2025, and less than 1.8 percent by 2026-2030.

Armenian state officials reportedly lost confidence in Russia's economy.

URL: http://www.today.az/news/regions/138919.html

Print version

Views: 1619

Connect with us. Get latest news and updates.

Recommend news to friend

  • Your name:
  • Your e-mail:
  • Friend's name:
  • Friend's e-mail: