Details of January growth
10 days ago National Statistical Service of Armenia issued initial macroeconomic indices for January 2017, pursuant which Armenia’s economic activity growth comprised 6.5% compared with previous January.
As already stated, it isn’t correct drawing conclusions based on one month (first ten days of which have been non-working), however 6.5% growth inspired optimism, that this year normal index may be recorded.
The point was that the data issued 10 days ago weren’t complete, or as the National Statistical Service states, were initial (quickly accumulated). It was observed that economic activity has grown based on two branches—industry and services.
3 days ago National Statistical Service also issued detailed indices. It’s becoming clear that 12.2% industrial growth was mainly recorded on account of 19.4% impressive growth of processing industry.
Volume of entire industrial production in January 2017 comprised AMD 108.1 billion, from which—production volume of industry comprised AMD 53.6 billion.
And considerable growth in processing industry was recorded toward production of beverages: this January beverages amounting AMD 7.3 billion have been produced, which exceeds the index of 2015 by 70%. Volume of food production has grown by 8.2% and comprised AMD 16.8 billion. Production of base metals has grown by 24.5% and reached AMD 13.2 billion. There are other directions of processing industry, where growth was more considerable, e.g. production growth of textile products has grown 3.1 times, electronic gadgets—2.5 times. However, their production volume is small and didn’t have an impact of total growth.
Thus, 3 main branches have contributed to the growth of processing industry—production of beverages, food and base metals.
However, another direction also contributed to the growth of general industry—supply of electricity, gas, steam and high-quality air. In January 11.3% growth was recorded, and the volume comprises around AMD 30 billion, from which: in January natural gas amounting AMD 7.7 billion was supplied, is more by 27.6% from previous year’s index for January. This growth is conditioned by the frosty weather.
As for the field of mining, decline is recorded. Production of mining industry and opencast mine exploitation comprised AMD 22.6 billion in January, reducing by 2.8%. From which: extraction of metal ore reduced by 3.1% and comprised AMD 22.5 billion.
It may be stated that growth in the field wasn’t recorded on account of mining, which is a positive tendency.
On account of which 12.1% growth of services has been recorded (volume of services amounted AMD 96.2 billion in January). In the previous year field growth was mainly recorded on account of gambling houses, which are introduced in statistics under “culture, entertainment and recreation” article.
In this direction 14.2% growth has been recorded in January 2017, however, it isn’t the only factor contributing to general growth of the field of services.
Volume of accommodation and catering services has grown by 25.5% in January and comprised AMD 5.2 billion. Transport services have grown by 24.3% (volume—AMD 11.8 billion), information and communication—by 8.8% (volume—AMD 17.5 billion), financial and insurance services—by 11.1% (volume—AMD 21.7 billion). From generalized 11 groups of services only 2 have decline—education (2.3% decline) and activity linked to property (6.8% decline). To sum up, we may state that growth in the field of services isn’t “inefficient” and was recorded as a result of incomprehensible activity of one field.
Internal trade turnover after certain decline period showed positive tendencies in January. 9.4% growth was recorded (trade turnover volume—AMD 128.8 billion), from which—retail trade turnover has grown by 3.6%, thus, comprising USD 74.2 billion, wholesale trade—by 14.8%. Trade of cars (including both trade of cars, their parts and accessories through specialized stores, and technical service and repair) has grown by 64% and comprised AMD 5.6 billion.
It may be stated that economic activity growth of 6.5% in January isn’t unhealthy, it’s a good start and may become a ground for certain optimism. However, it’s another issue that growth temp will be maintained or will weaken.
It should be noted that on the basis of 2017 state budget lies 3.2% economic index. For instance, upon CBA anticipations, 2.2-3.2% economic growth is anticipated and in the anticipated horizon economic growth temps will accelerate within 3.2-4.4%. Thus, 3.2% growth anticipated by the state budget, according to CBA is maximum threshold that may be recorded this year.
The government accepts that reduction of budget expenditures inhibits economic growth, however, it’s sure that it’s possible both to optimize and provide growth. And main guarantee of growth are anticipated investments.
PM Karen Karapetyan stated on investments amounting USD 840 million, which have already been clarified, financing is available and projects will be launched this year. In parallel with this projects of regional investments are being discussed, which can also enliven economy.
It can approximately been anticipated how much it’ll comprise. For instance, Hovhannes Azizyan, Deputy Minister of Economic Development and Investments, stated that each USD 100 million investment brings 1% economic growth. At the moment it’s being touched upon about 800 million “guaranteed” investments.
However, there is no need to get over-enthusiastic, as the Deputy Minister clarified that it refers to investment only (i.e. minus capital flow, payments).
Thus, to provide normal economic growth two things will be necessary: first, totally bring into life promised investments (so that nothing hinders at the last moment), and second, prevent capital flow. Not by administrative leverages or coercion, but developing such a field, that investors didn’t want to leave Armenia. In fact, it isn’t an easy job.
By Babken Tunyan
