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"Cold shower" from World Bank for Yerevan

01 April 2015 [14:45] - TODAY.AZ

/By AzerNews/

By Mushvig Mehdiyev

The World Bank's latest forecast on Armenia's economy has come as yet another proof that the sick economy of this post-Soviet country is now quite literally on its "deathbed".

In a significant downgrading move compared to its earlier outlooks, the WB said on March 31 that economic growth in Armenia will likely go below 1 percent this year due to primary spillover effects of Russia's economic downfall.

The world's top bank predicted late last year that Armenia's economy will go up by 3.5 percent in 2015, based on official statistical indices. However, the Armenian government emerged more optimistic, forecasting a growth rate at 4.1 percent.

The World Bank's Country Manager on Armenia, Laura Bailey said the economy in Armenia will unlikely grow beyond 0.8 percent limit this year.

"However, even this growth projection could seem overly optimistic given a deeper-than-anticipated crisis in Russia or renewed drastic fluctuations of the Armenian national currency, the dram’s exchange rate," Bailey said.

"I don’t have a forecast for what will happen with the dram. I am just trying to clarify that if there are sharp changes in either direction, it can emerge disruptive to exports and trade in Armenia," she added.

In an early March report, the WB expected no any significant breakthrough in Armenia's economy when Bailey said it will keep stagnating. In view of the government's 4.1 percent growth project, Bailey called it "unrealistic" against the ongoing economic background.

The Armenian currency weakened by roughly 18 percent against the U.S. dollar in November and December last year amid falling remittances from Armenian labor migrants particularly in Russia.

Armenia's Deputy Prime Minister, Vache Gabrielyan confessed the strictness of the WB warnings, acknowledging on March 30 that that the government will call to revise its projections downwards.

"There will be government discussions soon. I will present forecasts to you as soon as those discussions are over," he added.

"We are going to have less growth than previously expected," said Arsen Ghazarian, head of Armenia’s largest business association, adding that forecasts on Armenia's economy range from 0.5 percent to 2 percent.

The current economic atmosphere in Armenia is viewed as reminiscent of 2009 crisis as the gross domestic product in this former Soviet country grew by 3.4 percent in 2014, disproving the expected target announced by the government earlier last year.

Local experts, including Artak Manukyan say Armenia's economy is observing a free fall, characterized by year-on-year worsening life conditions in the country. Social indicators in 2013 were more positive than in 2014. Experts believe that 2015 and 2016 will see a worsening of all social indicators.

Based on the aforementioned stagnation, Armenia got bad mark also from Fitch and Moody's as both have downgraded their outlooks for the former Soviet nation's economic growth. The European Bank for Development and Reconstruction has even zeroed out its forecast on economy for Armenia in 2015.

URL: http://www.today.az/news/regions/139527.html

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