Growth that Reveals its Absence
Official statistics of Armenia published initial monthly Microeconomics indices 10 days ago. Firstly, it was announced, that Armenia’s economic activity as compared to the previous year grew by 5.1%, and secondly, it was particularly stated, that growth locomotive is industry, with its double-digit growth. Note, in January 2015 Economic Activity Index (EAI) temp was rather low—1.3%, i.e. it seems to be a promising start for the year. However, yesterday RA National Statistical Service published complete (thorough) data for January, from which it’s observed that 5.1% EAI growth might not serve an optimistic ground.
It’s worth touching upon industry first. Thus, as formerly mentioned, industry recorded 15.7% growth in January. Volume of production of the field comprised AMD 94.4 billion. 15.7% is a rather serious indicator.
What does this growth mean? Essentially, nothing.
Like in 2015, growth in industry is totally conditioned by growth of mining. Thus, production of mining industry and exploitation of open-cast mines comprised AMD 19.2 billion in January of current year. It exceeds the indicator for 2015 by 75%.
Meanwhile, volumes of manufacturing for the same level decreased by 6.3% and comprised AMD 44.9 billion. For instance, volume of food production in manufacturing fell by more than 8%.
Note, in 2015 as well, 5.2% increase of industry was provided due to mining industry, while in other branches reduction was observed.
Besides industry, there is another field, indicator of which is catching attention. It refers Construction. Since 2009, for the first time, the field of construction succeeded to overcome decline last year. In 2015 0.3% growth was recorded.
Construction set a real record in January—5.1%. Volume of construction, surely, is incomparable with mid-2000s—totally AMD 8.2 billion. One may think, construction seems to activate, however it’s not so.
Exactly half of construction of that AMD 8.2 billion—AMD 4.1 billion, was implemented on account of international loans. Volume of construction implemented by external resources has gone up more than 10 times.
Moreover, lion’s share comprises loan by Asian Development Bank (ADB)—AMD 3.7 billion, i.e. construction growth was provided due to North-South Road Program.
Construction on account of state budget has reduced by about its half and comprised AMD 596.8 million. However, the most concerning are, surely, indices of enterprises. Construction on account of enterprises reduced by about 60% and comprised AMD 2 billion, from which—volumes of construction on account of foreign investments diminished 9 times.
The only bright spot here are indicators of construction by the population. Construction on funds of population grew by 18.3%, and comprised around AMD 1.5 billion.
Trade turnover indices were among the disappointing ones. As mentioned before, volume of trade turnover reduced by 2.7% and makes about AMD 118 billion. However, while scrutinizing this indicator, it turns out, that the fall is deeper. Retail trade turnover decreased by 5.7% and comprised AMD 72 billion.
And trade turnover of vehicles in 2016, as compared to January of the previous year, grew by 16.6% and comprised AMD 3.4 billion. Wholesale trade turnover recorded 1.5% growth as well.
The list may be developed, and all fields may be separately singled out: foreign trade, cargo transportation and etc. It’ll turn out that even in case of positive indicators, something is wrong and not proportionate.
And if considered in total, it’ll turn out, that as compared to the previous year, the situation is more bothering. Thus, previous year EAI provided growth mostly due to mining industry and agriculture, judging from data of this year, the only hope is mining.
By Babken Tunyan
