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Re: Armenia's Economic Pulse
the problem is 50% of Armenia's "imports" are remittance sent from abroad, mostly Russia.
the problem is 50% of Armenia's "imports" are remittance sent from abroad, mostly Russia.
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Re: Armenia's Economic Pulse
About 40% of currency transactions are speculative in nature and not for commerce.Originally posted by Haykakan View Post
Invariably speculators go for the majors, USD,EUR, GBP, JPY etc because the liquidity is high and the market becomes the counter-party.
In a small economy with small financial base, if things are bad who is going to be the counter-party, not the CB while the currency is floating.
The National Central Bank would not be able to buy all its currency against a speculative tide, that would deplete its foreign reserves.
This is why the central bank will fix the rate and try to hold it at that rate by being the counter-party.
It the pressure is too high it will lower the rate and try to hold etc.
Like you say this may be risky, but the CB has one great advantage.
It has insider knowledge where typically the outside world does not have.
The country's financial position and the anticipated reaction of the market.
In order to pre-empt the market the CB will play with the rate in advance to “stabilize” the market.
If you like the CB is the speculator against its own currency but to the benefit of the country.
.Politics is not about the pursuit of morality nor what's right or wrong
Its about self interest at personal and national level often at odds with the above.
Great politicians pursue the National interest and small politicians personal interestsComment
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Re: Armenia's Economic Pulse
Is anybody able to name the tomato oligarch in question.
It was not mentioned during during this presentation for obvious reasons.
.Politics is not about the pursuit of morality nor what's right or wrong
Its about self interest at personal and national level often at odds with the above.
Great politicians pursue the National interest and small politicians personal interestsComment
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Re: Armenia's Economic Pulse
Fixing the currency requires large scale buying and selling of the domestic currency and the currency it is fixed to. Fixing the currency is a stabilizing force but the market still determines the actions of the cb. The problem with the "speculative tide" still exists if the CB is too small to have an impact on the market by buying and selling currencies. I am not sure where the proposed advantage is in your explanation?Hayastan or Bust.Comment
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Re: Armenia's Economic Pulse
Originally posted by Haykakan View PostI am not suggesting this cures the underlying problem, but manages the collapse therefore "things are under its control."Originally posted by londontsi View Post
As an example if the CB anticipates heavy selling of its own currency it will drop the exchange rate by an amount to discourage sellers since they will get a very bad deal.
Following the crash ( initiated by the CB) only the CB knows if sellers have dried up and start buying its own currency before anybody else.
The blame is apportioned to the speculators etc while CB is quietly managing its reserves.
.Politics is not about the pursuit of morality nor what's right or wrong
Its about self interest at personal and national level often at odds with the above.
Great politicians pursue the National interest and small politicians personal interestsComment
-
Re: Armenia's Economic Pulse
Politics is not about the pursuit of morality nor what's right or wrong
Its about self interest at personal and national level often at odds with the above.
Great politicians pursue the National interest and small politicians personal interestsComment
-
Re: Armenia's Economic Pulse
First Comprehensive E-Readiness Report for the Republic of Armenia
“ICT usage by the households and individuals in the Republic of Armenia” report was published as a result of nationwide survey carried out in October 2014. ICT household statistics are demanded by a variety of users. Since survey-based ICT statistics is a relatively new in Armenia, this survey is first comprehensive initiative to produce ICT data and evaluate ICT usage by the Armenian population. The most influential data users are Government, policy-makers responsible for telecommunications and ICT policy, together with users from business, the non-profit sector and academia.
E-readiness survey aims at measuring the degree to which the households of Republic of Armenia are ready, willing or prepared to obtain benefits, which arise from the information and communication technologies (ICT). The main focus of the survey is estimation of the use of ICT by households.
The report provides comprehensive analysis on ICT usage in households and by individuals in the Republic of Armenia. The statistics is based on the survey carried out by Armenian Marketing Association on behalf of Transactional E-governance Development in Armenia (e-Armenia) project from September to October 2014.
The survey shows that the Internet access is quite widespread in Armenia, 82% of households have the Internet. The World Bank data reveal that the number of the Internet users has increase almost three times since 2009 in Armenia. The gap between developed countries and Armenia in access to the Internet is significantly diminished. The number indicates quite high penetration, compared with 79% of households in the EU28 in 2013.
In the capital Yerevan the average number of households having access to the Internet is 89%, while for the regional cities the average is 79% and for villages 73%. More than half of the population uses the Internet every day or almost every day. The most common activities are the usage of the social networks (65%) and telephoning over the Internet and video calls (87%).
Meanwhile, less than half of the individuals have email address and only 35% of them regularly send and receive email. Here comes the need of providing the email address to all Armenian citizens. The most popular communication and social networks are Skype (65%), Odnoklassniki (50%) and Facebook (46%).
The use of e-governance application is still low: only 5% of the Internet users have obtained information from public authorities’ websites within the last twelve months prior to the survey and 2% downloaded forms. As for e-commerce in Armenia, the estimations show that almost 5% of individuals have bought or ordered goods or services over the Internet. An analysis of e-commerce based on age group reveals that the most frequent users of e-commerce are people aged 18-25, while people above 46 years old have almost never bought or ordered anything online.
The computer users are quite proficient in basic tasks such as copy, past of information, moving files and using arithmetic formulas operations: on average half of the individuals possess the mentioned skills. According to the survey results in terms of different indicators such as frequency of usage of computer or the Internet or e-skills men and women have almost identical competencies. Accordingly, we can state that the gender differences in usage of ICT are insignificant.
ICT access and usage are key enablers of countries’ overall technological readiness. The Internet has become important for daily life, education, work and participation in society. In Armenia, the large majority of households and individuals make use of the ICT.
Yerevan, 10 December 2014
The project “Transactional e-Governance Development in Armenia”Comment
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Re: Armenia's Economic Pulse
The Jobs Challenge in the South Caucasus – Armenia
December 16, 2014
Jobs are essential to lifting people out of poverty and to ensuring that prosperity is shared by everyone – but the transformative power of jobs is not always harnessed as it could be.
In Europe and Central Asia, countries often lag behind other advanced economies and countries in other middle-income regions in terms of job creation and labor market participation – especially for youth, older workers, and women.
In order to design effective “jobs strategies” for countries, it is necessary to undertake in-depth diagnostics and provide specific policy messages.
Dandan ChenExpanding jobs is central to meeting the twin goals of ending extreme poverty and boosting shared prosperity. We need not only more jobs, but also better and more inclusive jobs in Armenia.
World Bank's Program Leader in the South Caucasus (Education, Health, Social Protection and Labor, Jobs, Environment, Fragility and Conflict)
The South Caucasus country of Armenia is no exception.
Using the poverty line of $2.50 a day for the Europe and Central Asia region, Armenia’s poverty rate remains high today at 30 percent. The incidence of poverty is found to be closely associated with the labor market outcomes of individuals. For example, heads-of-households who are unemployed or inactive are considerably more likely to be poor than heads-of-households who are employed. In 2010, half of the population from households where the household-head was unemployed was living below the poverty line.
In Armenia, the unemployment rate is at 16 percent today: out of 100 persons of working age (15-64 years), only 53 are employed. In addition, every other unemployed person is jobless for more than a year. The problem is not only high unemployment – but also low labor force participation. Only about two-thirds of persons of working age are employed or looking for work.
And, many of those who are employed have low-productivity jobs. These are low-paid jobs that pay less than two-thirds of the median wage. One in four jobs in Armenia is low-paid.
Labor market outcomes have a crucial impact on the risk of poverty faced by both individuals and households. The incidence of poverty is not only high among the urban unemployed, but also among low-paid workers. Informal jobs often do not prevent poverty. As a result, Armenia has a large number of working poor. High work intensity of the household is critical for avoiding poverty, but in Armenia a large proportion of households are characterized by low work intensity.
Employers claim that unfair competition by informal firms is the most detrimental impediment to job creation, as informal firms do not pay taxes and therefore have a cost advantage. Employers also view red tape and bureaucratic harassment as major obstacles, even more so than skill shortages.
By comparison, less than 10 percent of firms report labor regulations as an important obstacle to firm growth and hiring new workers. Indeed, according to the World Bank’s Doing Business indicators, hiring and firing costs are low in Armenia. This suggests that improvements in the business environment could have a significant impact on accelerating the pace of job creation and could address the root cause of high unemployment in the country.
A recent report, Back to Work: Growing with Jobs in Europe and Central Asia, set the framework for the World Bank in supporting its client countries to get both the “demand” and “supply” side right – in terms of laying the fundamentals for the private sector to thrive and create jobs, and supporting workers so that they are well equipped and unhindered to take on the new job opportunities. According to this framework, Armenia faces a number of challenges to do with job creation.
Economic Restructuring
Net job creation generally reflects the pace of economic restructuring. Armenia has made less progress in developing the policies and institutions of a market economy in comparison to some of the leading transition economies.
Governance is weaker, enterprise restructuring is less advanced, and the environment is less competitive. Paying taxes, getting electricity and trading across borders are particularly onerous. Currently, the informal sector is still prominent in the economy, with informal employment represents as much as 64 percent of total employment.
Entrepreneurship
Armenian entrepreneurs are involved in a higher level of innovation activities than entrepreneurs in Georgia – even though the firm entry density is not as high, but this may be related to the business environment. In comparison with neighboring countries, Armenian entrepreneurs attain a higher level of education; many have postgraduate degrees.
According to the World Bank’s Skills for Employment and Productivity (STEP) household survey report, entrepreneurs in urban areas have a higher income than wage earners. Entrepreneurs consider skilled labor, market risk, and access to finance as the top three barriers to successful startups.
Skilled Labor Force
Armenian workers are well educated. Only a small proportion of workers have less than secondary education and these workers are concentrated in rural areas. In urban areas, one worker in three has a tertiary education, and one worker in four has a secondary technical education.
However, the most striking feature of employment in Armenia is the high incidence of low-pay among well-educated workers. A large number of Armenian workers claim to have skills higher than those required for their jobs. In other words, their skills are not fully utilized. The STEP survey shows that the average reading proficiency scores of Armenian adults are below international standards today.
Incentives to Work
The labor force participation rate in Armenia is low, due mainly to the low economic activity of women. Only 55 percent of women of working age are economically active. Low labor force participation has necessitated further examination of the roles of labor market institutions and social benefits in providing incentives or disincentives for work.
In addition, breaking the barriers that keep people from participating in productive jobs is also crucial. There is evidence that caretaking duties in the household, lack of transportation to the work place, or lack of information about job opportunities are correlated with labor force participation rate in the country. It is worth noting that caretaking duties for household members are remarkably higher for social safety net beneficiaries and the poor in general.Comment
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Re: Armenia's Economic Pulse
Armenian Dram Rebounds Sharply Overnight
YEREVAN (RFE/RL)—The Armenian dram strengthened against the U.S. dollar by 16 percent on Thursday after weeks of depreciation that accelerated dramatically earlier this week amid turmoil in Russia’s currency market.
Armenia’s national currency traded at an average of 476 drams per dollar in the evening, up from 553 drams per dollar registered the previous night. The dram thus essentially regained its value lost since last weekend. Still, it was 13.5 percent weaker against the greenback than in the beginning of November.
The dram rallied strongly despite the apparent absence of increased monetary intervention from the Central Bank of Armenia (CBA). The CBA said in the afternoon that its latest daily hard currency offer of $4 million attracted no purchase bids from local commercial banks.
The Central Bank governor, Artur Javadian, insisted on Wednesday that the dram is grossly undervalued and will start appreciating soon. Javadian blamed its sizable depreciation on speculators and “panic” which he said has spread from Russia. But he also acknowledged that Armenia’s dependence on multimillion cash inflows from Russia is a serious factor.
The ruble appreciated by 9 percent on Wednesday after dramatically falling on Monday and Tuesday. Its exchange rate was essentially flat on Thursday.
Prime Minister Hovik Abrahamian noted the dram rebound as he opened a weekly session of his cabinet in the morning. “A stabilization trend has been observed in the financial market in the second half of yesterday and today,” he said. “I am sure that it will continue.”
“Yesterday I met with representatives of the International Monetary Fund and the World Bank, other relevant agencies and economic entities,” Abrahamian told ministers. “Our international partners fully support our efforts to stabilize the financial market in the face of sharp exchange rate fluctuations conditioned by external factors.”
The CBA’s Javadian spent four hours answering lawmakers’ questions about the currency crisis during an emergency session of the Armenian parliament held behind the closed doors late on Wednesday. Finance Minister Gagik Khachatrian and other senior government officials were also present at the six-hour session. Parliament speaker Galust Sahakian told reporters afterwards that he believes the dram’s exchange rate will stabilize by the end of this month.
Opposition deputies were far from satisfied. Levon Zurabian of the Armenian National Congress claimed that the CBA chief failed to clearly explain the causes of the exchange rate volatility which has adversely affected economic activity in the country. Zurabian said the dram depreciation was made possible by a lack of foreign investment and outflow of capital from Armenia.
Another opposition lawmaker, former Prime Minister Hrant Bagratian, said the weaker dram has already lowered living standards in the country. “The dram may appreciate a little but the national economy cannot meet our needs,” he said. “So we are left to be worse off.”
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Re: Armenia's Economic Pulse
Forbes: Armenia is 56th among the best countries for business
Armenia is ranked 56th in the Best Countries for Business ranking issued by Forbes that listed 146 states.
“After several years of double-digit economic growth, Armenia faced a severe economic recession with GDP declining more than 14% in 2009, despite large loans from multilateral institutions. Sharp declines in the construction sector and workers' remittances, particularly from Russia, led the downturn.The economy began to recover in 2010 with 2.1% growth, and has grown even faster in the three years since then ,” the report said.
Forbes experts noted that the Armenian government made some improvements in tax and customs administration in recent years, but anti-corruption measures have been ineffective and the economic downturn has led to a sharp drop in tax revenue and forced the government to accept large loan packages from Russia, the IMF, and other international financial institutions.
“Armenia will need to pursue additional economic reforms and to strengthen the rule of law in order to regain economic growth and improve economic competitiveness and employment opportunities, especially given its economic isolation from two of its nearest neighbors, Turkey and Azerbaijan,” the report said.
Denmark is named the best state for doing business, while top ten also includes Hong Kong, New Zealand, Ireland, Sweden, Canada, Norway, Singapore, Switzerland and Finland.
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