Armenia's Economic Pulse

[Mher]

Re: Armenia's Economic Pulse

EU and Armenia Agree Trade Deal

European Commission
Brussels, 24 July 2013

EU and Armenia Agree Trade Deal

The European Union and the Republic of Armenia today successfully concluded negotiations on a Deep and Comprehensive Free Trade Area (DCFTA), as part of the Association Agreement between the EU and the Republic of Armenia.

At the seventh and final round of negotiations – held in Yerevan – negotiators reached agreement on the key elements of a deal which will create a new framework for trade relations between the EU and Armenia. The DCFTA will strengthen Armenia's economic integration with the EU by providing better market access for European and Armenian goods and services to each other's markets. It will offer Armenia a framework for modernising its trade relations and for economic development on the basis of far reaching harmonisation of laws and regulations in various trade-related sectors. These reforms will create the conditions for Armenia to bring key sectors of its economy in line with EU standards. The improved trade opportunities brought about by the DCFTA are expected to bring economic benefits to both the EU and Armenia.

"Today's conclusion of negotiations on a Deep and Comprehensive Free Trade Area between the EU and Armenia paves the way for Armenia to enjoy much improved access to the EU market in more than trade in goods, which will help the country strengthen its exports, increase investment and sustain growth", said EU Trade Commissioner Karel De Gucht. "In the end, it will contribute to the overall stability and prosperity of the region, and contribute to citizen's well-being. I congratulate and thank the negotiators on both sides for their successful work. I look forward to a political confirmation of this week's achievement at the Vilnius Summit in November this year. We will need to actively prepare for implementation."

An independent study suggests that in the long run the Armenian economy could gain an extra €146 million a year, representing a 2.3% increase in GDP. Removing non-tariff measures is key to realising these benefits. For its part, the EU is expected to gain by some €74 million.

The DCFTA will have significant impacts on Armenia's trade. The forecast 15.2% increase in Armenian exports and 8.2% increase in its imports in the long run will lead improve Armenia’s trade balance in relative terms.

Background

The EU began negotiating an Association Agreement with Armenia in July 2010. The aim was to replace the old Partnership and Cooperation Agreement with a more advanced relationship. The negotiations on the trade part of this agreement – the Deep and Comprehensive Free Trade Area (DCFTA) – were launched in May 2012. After seven rounds of negotiations, final agreement was reached on 24 July 2013. The Commission will now report to the EU Member States on the negotiated DCFTA text. After that, the EU and Armenia will carry out the next steps to formally mark the finalisation of the DCFTA as part of the Association Agreement.

The EU is Armenia's biggest trading partner, covering some 32% of its trade. Bilateral trade in goods amounted to €951million in 2012.

The country already benefits from preferential access to the EU market through the EU Generalized System of Preferences with additional incentives for sustainable development and good governance ("GSP+"). This means that existing import duties are already very low, so the benefits of the DCFTA, although they also include tariff reductions, will lie predominantly behind the border. Regulatory reform will focus on areas such as sanitary and phytosanitary issues, aiming to bring food safety standards in Armenia up to a par with those in the EU. Armenia will also adapt various laws relating to industrial goods, with an emphasis on domestic safety and consumer protection.

For further information

For further information on the independent study 'Trade Sustainability Impact Assessment' on the EU-Armenia DCFTA - http://tsia.ecorys.com

http://europa.eu/rapid/press-release_IP-13-740_en.htm

[Haykakan]

Re: Armenia's Economic Pulse

ARMENIA-BASED SOCIAL NETWORK LAUNCHED

http://asbarez.com/112759/armenia-based-social-network-launched/

Tuesday, August 13th, 2013

The screenshot of the Web site's home page

YEREVAN-An Armenia-based startup, Saymetruth, announced the official
beta launch of its anonymous social network Saymetruth.com Tuesday,
where people can anonymously tell their friends, family members and
relatives the things they would never say in person.

"There are a lot of things that even best friends, family members or
relatives cannot tell each other," said Alexander Adamyan, co-founder
of Saymetruth. "Sometimes a girl can't tell her best friend that her
yellow shoes don't match her dress, a husband can't tell his wife that
she gained weight, or a son can't say to his politician father that
he becomes too funny after the use of alcohol. The reasons for not
telling the truth are that we worry the person will misunderstand us,
take it wrongly or we just feel uneasy. But there are things that
people must know about themselves, and if we can't say it openly,
we can do it incognito."

One of the key points of Saymetruth.com is that people have to prove
that they know the person before sending them messages (for example,
they need to know their phone number or must be on their Facebook
friends list). Another important point is that people are not required
to register if they are just going to tell something to their friends.

If you want to help a person, the process should be quick and easy.

"If a person knows that there is even a slight probability that the
friend will find out who told them the truth, or in other words
they will be "caught", they'll refrain from speaking out," says
Saymetruth co-founder Hrachya Manukyan. "There's no possibility of
"being caught" on Saymetruth.com. There's no need to register on
the website or provide any personal data. You just need to find your
friend and send them a message."

Saymetruth is a global startup with plans to conquer the international
market. "Today our main goal is to gain a foothold in the US market,"
says Manukyan, "then we will move forward."

[bell-the-cat]

Re: Armenia's Economic Pulse

ARMENIA-BASED SOCIAL NETWORK LAUNCHED

http://asbarez.com/112759/armenia-based-social-network-launched/

Tuesday, August 13th, 2013

The screenshot of the Web site's home page

YEREVAN-An Armenia-based startup, Saymetruth, announced the official
beta launch of its anonymous social network Saymetruth.com Tuesday,
where people can anonymously tell their friends, family members and
relatives the things they would never say in person.

"There are a lot of things that even best friends, family members or
relatives cannot tell each other," said Alexander Adamyan, co-founder
of Saymetruth. "Sometimes a girl can't tell her best friend that her
yellow shoes don't match her dress, a husband can't tell his wife that
she gained weight, or a son can't say to his politician father that
he becomes too funny after the use of alcohol. The reasons for not
telling the truth are that we worry the person will misunderstand us,
take it wrongly or we just feel uneasy. But there are things that
people must know about themselves, and if we can't say it openly,
we can do it incognito."

One of the key points of Saymetruth.com is that people have to prove
that they know the person before sending them messages (for example,
they need to know their phone number or must be on their Facebook
friends list). Another important point is that people are not required
to register if they are just going to tell something to their friends.

If you want to help a person, the process should be quick and easy.

"If a person knows that there is even a slight probability that the
friend will find out who told them the truth, or in other words
they will be "caught", they'll refrain from speaking out," says
Saymetruth co-founder Hrachya Manukyan. "There's no possibility of
"being caught" on Saymetruth.com. There's no need to register on
the website or provide any personal data. You just need to find your
friend and send them a message."

Saymetruth is a global startup with plans to conquer the international
market. "Today our main goal is to gain a foothold in the US market,"
says Manukyan, "then we will move forward."

I don't see how can it be anonymous when a phone number is required to be on record, and if those posting have to already be "friends", i.e. known, to whoever the posts are addresed to. It can only be anonymous to those who never post but just read. But even in its current business model, I expect reactionary forces in the Church and Government are moving against it as we write.

OK, it would not happen realistically, but with the right data privacy laws in place, and if only Armenia were better connected internationally, Armenia could become a world centre for secure hosting given that just about every country is currently trying to restrict internet freedom and control and observe all communications that people make using it.

[Mher]

Re: Armenia's Economic Pulse

Moody’s Raises Armenia Outlook

YEREVAN (Wall Street Journal)—Moody’s Investors Service has raised its outlook on Armenia’s junk-level ratings, touting the nation’s deficit-reduction efforts and continued access to external funding sources on favorable terms.

The ratings firm’s outlook on Armenia is now stable, and the nation’s rating was affirmed at Ba2, which is two levels into junk.

Moody’s touted the nation’s commitment to fiscal consolidation, as reflected in the reduction of its deficit to 1.5 percent in 2012 from 7.5 percent in 2009. Moody’s expects Armenia’s fiscal deficit will remain low this year and in 2014, reflecting the costs of pension-reform implementation starting in 2014 and some resumption in capital expenditures.

Moody’s did express some concern about the nation’s ability to absorb external shocks, which has weakened amid its economic and financial exposure to Russia, which is experiencing an economic slowdown. Other concerns include natural gas and energy tariff increases that were implemented in July and large official loan repayments due the next two years.

Armenia could be assigned a positive outlook and an eventual upgrade if the structural reforms the government implemented propel the economy towards more balanced growth and with a significant reduction in the current account deficit. Negative rating pressure could occur if the economic slowdown in Russia is sustained or if adverse export minerals prices were to persist.

http://asbarez.com/113090/moodys-raises-armenia-outlook/

[Haykakan]

Re: Armenia's Economic Pulse

THE ARMENIAN ECONOMY HOPES FOR EUROPEAN BILLIONS

Vestnik Kavkaza, Russia
Aug 21 2013

21 August 2013 - 3:32pm

David Stepanyan, Yerevan, exclusively to VK

Despite optimistic statements by the Armenian authorities that the
economy is coming out of a state of free fall, for five years in a
row the country has been suffering economic decline. According to the
World Bank, in 2008-2012 alone, the absolute decline in GDP was 15.1%,
from $11.662 billion to $9.91 billion. The decline in the Armenian
economy comes amid the growing economies of neighboring countries.

However, the authorities prefer to keep these data hushed up, pointing
to the 7 percent growth in 2012. However, this "growth" of the economy
was accompanied by the growth of GDP only from 3.8 trillion drams
in 2011 to 3.9 trillion drams in 2012. Thus, even a non-specialist
understands that in reality, the authorities for the past 5 years
have reduced the volume of the economy. The notorious "growth" only
exists in the statements of the National Statistical Service.

The real state of affairs is reflected by the indicator of the level
of foreign investment, especially FDI. Even according to the National
Statistical Service, the total amount of foreign investment in the
real sector of the economy in January-March 2013 decreased by 11.9%
to 131 million dollars. Direst foreign investment in the real sector of
the economy during the same period amounted to 57.7 million dollars, a
decrease of 35.4%. However, the head of the parliamentary Committee on
Financial-Credit and Budgetary Affairs, Republican Gagik Minasyan, is
inclined to explain the decline in foreign investment by international
trends, uncertainties and crises. He said that in today's world there
is no country in which in 2013 investment growth would be observed.

With all due respect to Minasyan, "Vestnik Kavkaza" was able to find
at least three of these countries, and not in the world but among the
countries of the CIS. In the first quarter of 2013, growth in foreign
investment was recorded in Uzbekistan by 13.2%, in Ukraine by 76%,
and in Belarus by 18.2%.

As for Armenia, the outflow of capital, which has not yet become a
catastrophe according to unofficial figures, last year reached $700
million. The Armenian Statistical Service does not publish indicators
of capital flight, publishing only its inflow. And the outflow of funds
is quite understandable, since investing excess capital in an economy
devoid of growth in the consumer market and having the highest rate
of all possible monopolizations is not that attractive. All this
is accompanied by migration caused by a real deterioration of the
economic situation.

The recent steps of the authorities suggest that they are going to
save the situation through regular injections into the economy. In
particular, it comes with 3.4 billion euros promised by Europe in
the case of initialing agreements on a free trade area (DCFTA) and
associative membership with the EU. This amount will be one of the
links in the chain of logic that drives the Armenian authorities
towards initialing the agreements at the November summit of the
"Eastern Partnership" in Vilnius. Although the idea of the "Eastern
Partnership" was launched by the EU, namely by Poland, in defiance of
the integration ambitions of Russia in the territories of the former
Soviet Union, the Armenian authorities claim that the association with
the EU promises economic prosperity. This occurs against the background
of an information vacuum about the content of the Association Agreement
and free trade zone.

It is unclear what the effect of the DCFTA on the market and the
structure of the economy of Armenia will be after the entry into
a developed and competitive European market. According to European
Commission estimates, DCFTA will allow Armenia "to modernise trade
and economic relations and developing the economy to bring its key
areas in line with European standards." As a result, revenues of the
Armenian economy will grow by 146 million euros per year, or 2.3%
of GDP, which would increase exports by 15.2%, and imports - by 8.2%,
and, correspondingly, improve the trade balance. However, according
to the director of the European Centre for Geopolitical Analysis,
Mateusz Piskorski, the experience of countries concluding similar
agreements indicates that the association led to expansion of outside
players into their markets, which were more competitive than local
producers, especially according to pretty tough EU standards. The
analyst believes that the signing of DCFTA could lead to job losses
in Armenia, as occurred in Central Europe.

Even if the goods produced in Armenia meet European standards, they
will still not be competitive in the European markets. Because of large
subsidies, reaching 30% of the EU budget, the agricultural sector is
supplying products at dumping prices, and, respectively, competing with
the Europeans will be quite difficult for Armenian farmers, given that
this sector in Armenia is not only not subsidized, but also considered
a source of state income. Regardless of the quality of agricultural
products, following the ratification of DCFTA Armenian producers may
be at a disadvantage. Speaking of competition in the field of heavy
industry in general is not possible, and this threatens Armenia,
which supplies to the EU only copper and molybdenum concentrate and
mining products, being a raw materials appendage of the EU for years.

In short, the prospects of DCFTA are not so rosy as they are being
presented by those in power. There is no answer to the question of
whether the Customs Union is beneficial for Armenia. Communication
with MPs, even off the record, shows that the parliamentary majority
does not completely understand this topic, does not know anything and
therefore cannot understand anything. It seems that either Armenia
does not have any dialogue with Russia or it exists only at the top
level, where the fate of a whole nation is determined by one person.

In such circumstances, neither Europe nor Russia knows what to expect
from Armenia and what the surprises from its authorities could be.

http://vestnikkavkaza.net/analysis/economy/44127.html

[Mher]

Re: Armenia's Economic Pulse

Fitch Ratings affirms Armenia at ‘BB’

August 17, 2013 | 11:36

Fitch Ratings has affirmed Armenia’s Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘BB-’ with a Stable Outlook.

The Country Ceiling has been affirmed at ‘BB’ and the Short-term rating at ‘B’.

“The affirmation reflects the following factors: The consolidated general government deficit fell to 1.4% of GDP in 2012, down from 2.8% of GDP in 2011, outperforming the target for the second successive year.

The government succeeded in meeting its goal of increasing tax revenues, although under-execution of capital spending also contributed, by 1.2pp of GDP. The deficit will increase again in 2014 due to the costs of introducing a pension reform, estimated at 0.5% of GDP in the first year. General government debt rose 1.8pp of GDP to 44.1% of GDP in 2012, but Fitch expects it to stabilise from 2013 onwards. Growth slowed in Q213, but Fitch expects it to reach 5% in 2013-15, higher than its previous forecasts,” the statement reads.

“Serzh Sargsyan won a second term as president in February 2013, completing a smooth election cycle and pointing to policy continuity. However, an angry popular response to a proposed rise in public transport fares in Yerevan suggests dissatisfaction and latent political risks. Armenia's rating is supported by a relatively strong macroeconomic framework and a good inflation track record in comparison with the peer group of ‘BB’ rated sovereigns. Fitch assumes that Armenia continues to enjoy broad social and political stability, and that there is no significant worsening in tensions with Azerbaijan surrounding Nagorno-Karabakh.”

http://news.am/eng/news/167226.html

[Haykakan]

Re: Armenia's Economic Pulse

CHORRORD INQNISHKHANUTYUN: ARMENIA TO REQUEST BIG GRANT FROM EUROPE

09:22 28.08.13

The paper says it has learned from sources that President Serzh
Sargsyan has asked the prime minister to introduce justifications of
a grant request worth over ~@1 billion worth at an upcoming European
donor meeting.

The Armenian authorities reportedly want the money for the
implementation of such projects as the North-South highway construction
and the new water system launch, environmental protection and the
construction of new dams, as well as the manufacturing assistance
program aimed at boosting exports.

Citing its sources, the paper says that the government is going to
request a sum of around ~@532 million for activities in the irrigation
system. The authorities expect to get the grant in the form of money
and finish the work in 2025, adds the paper.

"Europe will in all likelihood approve the grant, with the signing of
the European Association Agreement looming ahead. The existing opinion
is that Europe doesn't consider this a 'bribe'; it is really confident
that the money will help Armenia to really launch reforms in line with
the essential standards of the European civilization," says the paper.

Armenian News - Tert.am

[Haykakan]

Re: Armenia's Economic Pulse

RUSSIA, GEORGIA AND ABKHAZIA AGREE TO OPEN ABKHAZIAN RAILWAY

Russia, Georgia and Abkhazia agree to open the Abkhazian railway, the
Secretary of the National Security Council Arthur Baghdasaryan said.

He says the railway has strategic implications for the economy
of Armenia.

"The Georgian side has agreed, so did the Russian and Abkhazian ones.

However, this is a process, and we need to understand that there are
conflicting sides. Importantly, however, there is a political will,"
Baghdasaryan said.

16:17 06/09/2013 Story from Lragir.am News:

http://www.lragir.am/index/eng/0/politics/view/30828

[Haykakan]

Re: Armenia's Economic Pulse

CHINA IS DETERMINED TO LAUNCH ACTIVE COOPERATION WITH CUSTOMS UNION
by Arthur Yernjakyan

arminfo
Tuesday, September 10, 18:02

China is determined to launch active cooperation with the Customs
Union, Chinese Prime Minister Li Keqiang said during a meeting with
his Armenian counterpart Tigran Sargsyan on September 10.

The press service of the Armenian Government reports that the
governmental delegation headed by Tigran Sargsyan left for China on
September 9 to participate in the session of the World Economic Forum.

The Armenian and Chinese premiers discussed the prospects for regional
cooperation. Sargsyan presented Armenia's decision to join the Customs
Union. "China understands Armenia's desire to take an active part in
the regional processes and China is also determined to launch active
cooperation with the Customs Union", Li Keqiang said.

He also expressed China's willingness to increase investments in
Armenia's economy and to import Armenian commodities. "We want to see
Armenian brandy, xxxelry and precious stones on the Chinese market",
he said.

Sargsyan pointed out the significance of development of tourism and
establishment of direct air service between Armenia and China. As
regards the export of Armenian commodities, the Armenian premier said
that Armenian producers increase the output of Armenian brandies
and wine. He added that Armenia also produces cigarettes and asked
his Chinese counterpart to promote the sales of these goods on the
Chinese market. Sargsyan also called on the Chinese companies to take
part in the free trade zone opened in Armenia.

To recall, on September 3 Armenian President Serzh Sargsyan said that
Armenia had made a decision to join the Russia-led Customs Union.

[Haykakan]

Re: Armenia's Economic Pulse

CHINA TO PROVIDE ADDITIONAL $16-MILLION GRANT TO ARMENIA

September 10, 2013 | 14:05

YEREVAN. - The People's Republic of China will provide an additional
$16-million grant to Armenia.

The respective agreement was reached Tuesday during the talk between
Armenia's Prime Minister Tigran Sargsyan-who is in China on a working
visit-and Li Keqiang, Premier of the State Council of the People's
Republic of China, in Dalian city.

The Chinese premier thanked Sargsyan for attending the World Economic
Forum in Dalian, informs the Armenian government press service.

In turn Armenia's PM reflected on bilateral relations.

"The development of relations with China is a priority for us. I would
like to thank China for its balanced position on the Nagorno-Karabakh
issue. I am also happy that our relations are deepening," Tigran
Sargsyan stated, in particular.

"I know that you and the Armenian people give great emphasis to Chinese
culture. In this regard, we stand ready to increase the number of
your students at the institutions of higher education of China,
and to expand the activities of the Confucius Center [in Armenia].

"We are prepared to guide our citizens toward visiting Armenia.

Activities will be carried out toward increasing Chinese investments
in Armenia. We are also ready to import a variety of products from
Armenia to the Chinese market.

"We have made a decision to provide an additional 100-million-yuan
[approx. $16 million] free financial aid to the Government of Armenia,
to carry out joint projects.

"China's position on the Nagorno-Karabakh issue is that the parties
should be able to reach a solution with restraint and talks, and
peace should be established in the region," specifically noted the
Chinese premier.

News from Armenia - NEWS.am