On account of what does economy activate?
Judging from official statistics Armenia’s economy is developing more quickly, than anticipated. Thus, in January-March 2017 compared with the same period of the previous year, economic activity index (EAI) comprised 106.6%.
Or in the first quarter of ongoing year economic activity increased by 6.6% compared with the same period of the previous year.
Note, the index of 3.2% economic growth (of GDP) lies on the basis of state budget 2017. EAI and GDP growth are different of course, however, their values don’t differ much. In the first quarter Armenia’s GDP growth will be published in a month, however, it may be supposed around 5.5-6%.
6.6% economic growth index is impressive, in particular, against the background of recent years. Note, e.g. in the first quarter of 2016 economic activity grew by 5.6%, and in 2015—by 3%. In January-March last higher index of economic growth was recorded in 2013—8.7%, which however, reduced in the following months and comprised 3.5% in January-December.
Will current growth be stable or will weaken by the end of the year? Of course, it’s rather difficult making anticipations, as it depends on a large number of factors. However, there are signs of optimism on account of ups and down of 2016.
Thus, we concluded 2016 with a rather low index—0.5% economic activity growth compared with 2015. Meanwhile the year started rather successfully: in January 2016 economic activity grew by 4.3%, in January-February—4.9%, in January-March—5.6%, January-April and January-May—5.7% (comparisons are made with the previous year’s same period). From June growth temps weakened, and in the last quarter of the year even declining indices have been recorded (the month compared with the previous one).
What connection does it have to ongoing developments? The point is that this year’s 6.6% growth was recorded compared with the same period of the previous year, when indices were rather good, i.e. basis for comparison is rather high—the situation has changed compared with the improved.
If succeeded to maintain the temp in April-June as well (indices of previous year’s same period were also good), then second half of the year will be rather successful regarding indices. As already mentioned, from the second half of 2016 economic indices worsened and against their background recording growth will be much easier.
Some optimism inspires the circumstance that positive dynamics of 2017 refers not only to previous years, but first months of this year. In January 2017 compared with January 2016 economic activity grew by 6.4%, in January-February growth temp decreased up to 6.2%, and the quarter, as already stated, is concluded with 6.6% growth, which means growth temp has accelerated.
However, with all this it’s yet difficult to say what indices we’re going to have by the end of the year. Foreign investments promised by the government will play a considerable role. The government stated that only during the year foreign investments amounting USD 840 million will come to Armenia, if it becomes a reality, by the end of the year we’ll have economic growth more than 3.2%.
On account of what has economy been activated this year?
Based on data issued by the National Statistical Service of Armenia highest growth from economy branches was recorded by industry—16.1% (volume of production in the field of industry in the first quarter comprised AMD 361.2 billion). From which: mining has grown by 8%, and manufacturing industry—by 23.3%. However, one should get enthusiastic with industrial growth quality, as double digit growth of manufacturing was provided by production of base metals closely relating to mining. Volumes for production of base metals have grown by 33.3% and comprised AMD 26.3 billion in the first quarter.
Investment in the field of services is considerable as well. The field of services in the first quarter comprised around AMD 302 billion, real growth compared with the first quarter of previous year—10%.
Volumes of turnover of internal trade turnover also recorded a double digit—11.3% growth. In the first quarter of 2017 trade amounting AMD 489.2 billion was implemented in Armenia’s internal market. This is also a positive index, especially, when we take into account that it isn’t conditioned by rise in price, just the contrary—in January-March we have 0.3% drop in prices.
However, not all the fields had growth. Construction continues falling. In January-March 2017 construction amounting AMD 35.8 billion was implemented in the republic, which is lower by 13.7% compared with the index of the previous year’s first quarter. Detailed data for March haven’t been published yet, however, it’s observed from January-February report that construction implemented on account of state budget and international loans has decreased (population and organizations, just the contrary, have increased construction volumes).
Agriculture joined construction as well. Volume of agricultural production compared with the first quarter of previous year reduced by 1.5%, thus, comprising AMD 69.5 billion.
By Babken Tunyan
