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Armenia's Economic Pulse

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  • Re: Armenia's Economic Pulse

    Originally posted by Mher View Post
    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.

    My humble view is, ranking should be measured by results.

    Key criteria has to be the level of inward investment
    Relative standard of living improvement among its people, level of unemployment, wage levels etc.

    All other statistics can and are be manipulated.
    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 interests


    • Re: Armenia's Economic Pulse

      Ukrainian fund invests $30 million in Air Armenia
      16:43, 19.12.2014

      YEREVAN. – Ukrainian investment fund “East Prospect Fund” has invested $30 million into 49 percent of shares of Air Armenia company, managing director of the fund Vladimir Bobilev told reporters in Yerevan.

      It will be possible to transfer the most of these funds or even all to Armenia in the first quarter of 2015, and this will help the Armenian airline to upgrade its fleet.

      The company is registered in the British Virgin Islands, but in response to comment on the issue, managing director called not to use “ an offshore company” phrase.

      “We are a licensed financial institution that operates under British law and is subject to the same regulatory standards as any bank. Tax-free jurisdiction itself has nothing to say,” he said, adding that Soros Funds have such a status, too.

      Fund's portfolio is about $ 2.5 billion, and includes investments in a number of enterprises in Ukraine.

      Fund's adviser on investment policy Catherine Pavlyuk noted that the decision to cooperate with Air Armenia was made on the basis of a serious reputation of company's director general Arsen Avetisyan who is known abroad.


      • Re: Armenia's Economic Pulse

        Armenian Dram Rally Continues

        The Armenia dram rallied against the U.S. dollar for a second consecutive day on Friday amid more signs of stabilization in Russia’s volatile currency market severely affected by falling oil prices.

        The dram strengthened by another 5.7 percent throughout the day, trading at an average of almost 450 drams per dollar.

        The Central Bank of Armenia (CBA) again reported no hard currency injections in the local market. The CBA said that Armenian commercials banks declined to buy dollars from it for the second day running.

        The CBA also continued to stick to its benchmark interest rate, which has remained unchanged at 6.75 percent since August. The dram began depreciating against the dollar and the euro in early November.

        According to the Yerevan daily “Haykakan Zhamanak,” the Central Bank has instead drastically increased its minimum reserve requirement for commercial banks, forcing them to buy large amounts of drams. The paper said the decision was made on Wednesday in response to the dram’s sharp depreciation widely blamed on the collapse of the Russian ruble.

        The ruble’s strengthening in the last three days appears to given the Armenian currency a further boost. Armenia’s financial system is heavily reliant on large-scale remittances from Armenian migrant workers in Russia.

        Ara Galoyan, an economist, agreed that the developments in Russia and the “very interesting decision” taken by the Armenian authorities are the main factors behind the dram rally. In his words, the key challenge facing the authorities now is to help lower the increased prices of key imported goods to pre-crisis levels.

        “The toughest thing awaiting us is inflation,” Galoyan told RFE/RL’s Armenian service ( “If we manage to somehow mitigate [higher] inflation in January and February the dram could be a fairly stable currency.”

        The increased prices of imported foodstuffs such as flour and sugar sparked an anti-government protest in Yerevan on Friday. About 100 people gathered outside Prime Minister Hovik Abrahamian’s office, saying that the authorities are not doing enough to get government-linked importers to reverse what they believe are unjustified price hikes.

        The small crowd booed and chanted “Shame!” when it saw the most famous food importer, Samvel Aleksanian, come out of the building. Aleksanian refused to comment when approached by journalists. A government spokeswoman did not confirm or deny that the tycoon met with Abrahamian. The premier publicly decried “baseless” price hikes on Thursday.

        The Yerevan City supermarket chain owned by Aleksanian lowered some prices on Friday. But they were still above last month’s levels. Other, smaller grocery stores in the capital did not yet cut any prices. One shop manager complained that some of his wholesale supplies are still withholding their food products because of the exchange rate instability.
        <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


        • Re: Armenia's Economic Pulse


          YEREVAN, December 22. / ARKA /. The South Caucasus Railway (SCR),
          a subsidiary of state-run Russian Railways, plans to become the
          operator of a railway that Armenia and Iran want to construct to
          connect their railway systems, SCR CEO Viktor Rebets said today.

          In 2012, the Dubai-based Rasia FZE Investment Company, was granted
          a 50-year concession by Armenian government to build and manage the
          305-kilometer railway from Armenia to Iran, to be named the Southern
          Armenian Railway (SAR). By late 2013 Rasia FZE had developed a
          feasibility study for the project.

          Speaking at a news conference today Rebets said now the documents
          are being developed that will allow to start construction work. He
          said also the SCR had signed a relating agreement with Rasia FZE and
          according to it has a certain amount of work to do. This project is
          estimated to cost $3.5 billion.

          The high cost of the project is explained by mountainous terrain
          through which it is supposed to pass. Specifically, the 306 km-long
          railway will have 19.6 km-long 64 bridges and 60 tunnels of 102.3
          kilometers. The railway is to run from Gagarin station in Armenia's
          Gegharkunik province to Agarak in southern Syunik and may transport
          up to 25 million cargos a year.

          According to an Armenian government statement, the Southern Armenia
          Railway will create the shortest transportation route from the ports
          of the Black Sea to the ports of the Persian Gulf and establish a
          major commodities transit corridor between Europe and the Persian
          Gulf region." .-0-

          Hayastan or Bust.


          • Re: Armenia's Economic Pulse

            New Armenian Mining Giant Inaugurated

            Emil Danielyan
            Հրապարակված է՝ 22.12.2014

            Overcoming fierce resistance from environmentalists, a private mining company has officially launched production operations at Armenia’s second largest copper deposit that will significantly increase output in the main export-oriented sector of the Armenian economy.

            Vallex Group inaugurated at the weekend an ore-processing plant which it has built at the Teghut forest in the northern Lori province as part of a $380 million project to mine copper and molybdenum there.

            President Serzh Sarkisian underlined the Armenian government’s strong support for the controversial project with his presence at the opening ceremony. It took place just three weeks after the government gave the final green light to a British company planning to develop untapped gold reserves of Armenia.

            Armenian environment protection groups have for years tried to scuttle the Teghut project, saying that it would wreak more havoc on the country’s green areas that have shrunk dramatically since the 1990s.

            Open-pit mining at Teghut will lead to the destruction of 357 hectares of rich forest, including 128,000 trees. Vallex Group has pledged to offset this damage by planting twice as many trees in adjacent areas and thus creating a new and bigger forest. It has also denied environmentalists’ claims that ore crushing and enrichment will pollute a local river and underground waters.

            Vallex, which also mines copper elsewhere in Lori as well as in Nagorno-Karabakh, has also emphasized the project’s socioeconomic significance for Armenia. It claims to have created about 1,300 new jobs and has pledged to build new schools and upgrade infrastructure in nearby villages.

            Critics dismiss these assurances, arguing, among other things, that the company has failed to modernize its Soviet-era copper smelter located in Alaverdi, a Lori town notorious for its polluted air and high incidence of grave diseases.

            Vallex, which is run and at least partly owned by Russian-Armenian businessman Valeri Mejlumyan, claims to have already invested almost $340 million in Teghut. It has borrowed the bulk of that money from VTB, a leading Russian bank.

            The company also attracted last year $62 million in funding from a Danish pension fund which was due to be partly or fully channeled into purchases of metallurgical equipment. Earlier in 2013, the Armenian government agreed to delay by three years the collection of 20 percent value-added tax from some of that equipment.

            The Teghut forest lies atop ore deposits containing an estimated 1.6 million tons of copper and about 100,000 tons of molybdenum. In a statement posted on its website, Vallex said that it plans to manufacture $182 million worth of non-ferrous ore concentrates there already in 2015.

            By comparison, output in Armenia’s interconnected mining and metallurgy sectors totaled $300 million in January-October 2014, according to government data. The figure was equivalent to almost 29 percent of overall Armenian industrial production. Base metals and enriched ores also accounted for nearly half of Armenian exports which stood at $1.25 billion in the ten-month period.

            The sectors’ combined export revenue was down by roughly 5 percent year on year, reflecting a more than 10 percent fall in the international price of copper registered since January.

            The price of gold, another major Armenian export item, has also fallen considerably since the beginning of 2013. Nevertheless, Armenian gold exports rose by 10 percent to almost $60 million in January-September 2014, according to the national customs service. In physical terms, they were up by as much as 49 percent, at 2.77 metric tons.

            Armenia’s largest gold mines are operated by a Russian company, GeoPro Mining. The latter claims to have made $140 million in capital investments in the Sotk mines in the eastern Gegharkunik province and a smelter located in the southern town of Ararat since 2011.

            Gold production in the country should rise further after the forthcoming launch of mining operations at the smaller Amulsar deposit in the southeastern Vayots Dzor province. Lydian International, a British company, plans to invest more than $400 million in the operation. The Armenian Ministry of Environment Protection gave its final approval to the project early this month.

            “Lydian intends that Amulsar will become an exemplary mining and investment project in Armenia,” Howard Stevenson, the company chairman, said in a December 2 statement. He said at least 700 people will work at Amulsar for the next ten years.

            The Amulsar project has also sparked protests from Armenian environmentalists. They cite its proximity to Jermuk, the country’s largest and most famous spa resort.

            Lydian has repeatedly sought to dispel these concerns, saying that it will use advanced technology and strictly adhere to environmental safety standards.


            • Re: Armenia's Economic Pulse

              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.

              Click image for larger version

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              This is classic price (chart ) pattern of bottoming.

              Result of heavy buying, typical of big player activity ( CB ).
              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 interests


              • Re: Armenia's Economic Pulse

                China Allocates More Aid To Armenia

                Հրապարակված է՝ 23.12.2014

                China will provide$9.6 million in fresh economic assistance to Armenia next year, the Foreign Ministry in Yerevan said on Tuesday.

                A ministry statement said that the Chinese ambassador to Armenia, Tian Erlong, formalized the “technical aid” allocation with an agreement signed with Deputy Foreign Minister Sergey Manasarian. It gave no details of the aid, saying only that it will be provided in Chinese yuans.

                “The two sides are holding negotiations towards agreeing on a number of other programs,” the statement added without elaborating.

                According to the Armenian Foreign Ministry, the Chinese government has supported Armenia financially on an annual basis ever since 1999. The Chinese aid totaled $37 million between 2012 and 2014. That included an $11 million grant provided by Beijing in early 2013 for the construction of a Chinese school in Yerevan and the purchase of equipment for the Armenian customs service.

                Citing “friendly relations” existing between the two nations, Chinese Premier Li Keqiang promised $16 million in additional funding when he met with his then Armenian counterpart Tigran Sarkisian in Beijing later in 2013. Li said his government will also encourage Chinese businesspeople to invest in the Armenian economy and import more Armenian goods.

                China has also donated hundreds of public buses and ambulance vehicles to Armenia in recent years.


                • Re: Armenia's Economic Pulse

                  Moody's: High reliance on Russia affects Armenia's economy, but fiscal prudence supports government's creditworthiness
                  - 16 Sep 2014

                  New York, September 16, 2014 -- Armenia's (Ba2 stable) economy will continue to be adversely affected by an economic slowdown in Russia (Baa1 negative) due to the economic linkages between the two countries, says Moody's Investors Service in a report published today. Following a stronger than expected decline in net exports and slowing remittances in H1 2014, Moody's has revised Armenia's growth forecast down to 2.1% in 2014 and 2.3% in 2015 from 3.2% and 3.6%, respectively. The revised figures are based on Moody's forecast for the Russian economy to contract by 1.0% in 2014, followed by stagnation in 2015.

                  Moody's report, an annually updated analysis of the Government of Armenia, is available on Moody's subscribers can access this report via the link provided at the end of this press release.

                  "Declining net exports and slowing remittances in the first half of 2014 underscore Armenia's significant trade and financial exposure to Russia, with further spillover risks stemming from the US' and the EU's tighter sanctions regime against Russia," says Moody's Investors Service. "Nevertheless, the government's commitment to fiscal prudence and macroeconomic stability, support Armenia's Ba2 rating with a stable outlook," continues the rating agency.

                  Moody's notes that Armenia's material exposures to Russia are via both direct and indirect channels. Russia accounts for nearly a quarter of Armenia's total imports and exports as well as an average of almost 45% of FDI in 2008-2012, while remittances from Russia represent 90% of the total received. A sharp slowdown in remittances, which contribute 15% of Armenia's GDP, in addition to lower FDI inflows, could lead to negative rating pressure if combined with sustained deterioration in fiscal and external buffers.

                  However, Armenia's Ba2 rating with a stable outlook is supported by the government's commitment to fiscal prudence and macroeconomic stability, which mitigate risks stemming from its significant exposure to external shocks and reduce its vulnerability to changes in global energy, food and commodities prices. The stable outlook also reflects the country's ongoing, albeit gradually diminishing, access to concessional borrowing under favourable terms.

                  The country's new Extended Fund Facility (EFF) agreement with the IMF aims to further strengthen revenue-generating capacity and bring the debt ratio to a declining path starting 2017. Additionally, Armenia intends to continue benchmarking against EU standards in order to establish the country's role as a gateway between the Western Hemisphere and the Eurasian region.

                  Moody's could consider assigning a positive outlook and eventually upgrading Armenia's rating if structural reforms, which the government is in the process of implementing, propel the economy toward more balanced economic growth and a significant reduction in the current account deficit.

                  <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


                  • Re: Armenia's Economic Pulse

                    Key Interest Rate Raised After Armenian Currency Fall

                    Emil Danielyan

                    Հրապարակված է՝ 23.12.2014

                    The Central Bank of Armenia (CBA) raised its benchmark interest rate for the first time in more than a year on Tuesday, citing the need to curb inflation after a considerable depreciation of the national currency, the dram.

                    The refinancing rate was set at 8.5 percent, up by 1.75 percentage points from its previous level set in August and upheld by the CBA’s governing board as recently as on December 3. The board had steadily lowered the minimum cost of borrowing in the country since August 2013 amid falling inflation and slowing economic growth.

                    In a statement released after the latest board meeting, the CBA said that inflationary pressures on the Armenian economy have grown in recent weeks due to the dram’s weakening resulting from shrinking “hard currency inflows from the outside world.”

                    Russia, the principal source of those remittances, has seen its currency, the ruble, depreciate by almost half since the beginning of this year because of falling oil prices and Western economic sanctions. The process accelerated last month and reached its climax a week ago.

                    The dram fell sharply on December 15-16 before rallying strongly in the following days. Its exchange rate has been relatively stable so far this week. Trading at an average of 462 drams per U.S. dollar on Tuesday evening, the Armenian currency was 11 percent weaker against the dollar than in early November.

                    The dram has regained much of its lost value despite the absence of large-scale dollar injections in the local currency market made by the CBA. The Central Bank sold only $2 million to commercial banks on Tuesday. Its daily dollar sales averaged $6 million earlier this month.

                    The dram depreciation has pushed up the prices of foodstuffs and other essential goods imported to Armenia. According to the CBA statement, the consumer price index rose by 1.3 percent in November, translating into a year-on-year inflation rate of 2.6 percent.

                    The CBA expressed confidence that full-year inflation in will not exceed the maximum target level of 5.5 percent set by the Armenian authorities for 2014. It said the higher refinancing rate will also ease “future inflationary pressures.”

                    <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>


                    • Re: Armenia's Economic Pulse

                      Armenian IT Industry Keeps Up Rapid Growth

                      Emil Danielyan
                      Հրապարակված է՝ 30.12.2014

                      Information technology (IT) companies remain the fastest-growing sector of Armenia’s economy that has expanded by 25 percent in 2014, according to official statistics.

                      Preliminary data from the Armenian Ministry of Economy shows the combined output of the nearly 400 IT firms operating in the country reaching almost $475 million. The figure is equivalent to about 5 percent of Gross Domestic Product and almost one-third of Armenian exports in 2013.

                      The Armenian IT industry, which is dominated by local subsidiaries of U.S. software giants, generated only 1.7 percent of GDP in 2010. The total number of skilled personnel working there has since more than doubled to around 11,600, the ministry figures show.

                      The export-oriented sector had already expanded by an average of 22 percent annually from 2008-2013. The Armenian government expects this growth to continue unabated in the years to come. Some government officials have forecast that the sector’s annual operating revenue will pass the $1 billion mark by 2019.

                      Much of this rapid growth has been driven by U.S. hi-tech firms such as Synopsys, National Instruments, Mentor Graphics and VMware. Synopsys, a global microchip design leader, employs about 700 engineers in Armenia, making its local branch the country’s largest IT enterprise.

                      VMware, which posted a net profit of $1 billion in 2013, plans to double the size of its Armenian subsidiary currently numbering over 60 specialists. “The business results that we are getting here give us confidence to expand. We are going to invest around $100 million here in the next four or five years,” Raghu Raghuram, a vice-president of the California-based software giant, told the Mediamax news agency during a November 2013 visit to Yerevan.

                      In another significant development, Oracle, the world’s second largest software developer, set up shop in Armenia just over a month ago. The Silicon Valley heavyweight reportedly plans to expand its research and development office in Yerevan.

                      The IT industry has been further boosted in recent years by a growing number of startups partly or fully owned by Armenians. According to the Ministry of Economy, more than 200 such firms have been set up since 2007. Those include PicsArt, the manufacturer of one of the world’s most popular mobile photo-editing applications. The Yerevan-based company has reported more than 100 million software downloads since launching its key product three years ago.

                      Another Armenian startup specializing in mobile apps, Inlight, attracted strong interest from a Los Angeles-based company, Science Inc., and was acquired by the latter in July.

                      The Armenian government hopes to facilitate the emergence of more such home-grown firms with forthcoming tax breaks and a $6 million venture capital fund that started functioning in February 2014. Over the past few years, the government has also helped to set up about a dozen centers providing logistical, technical and even financial assistance to promising IT entrepreneurs. Two of those hi-tech “accelerators” are sponsored by the world-famous Microsoft and Nokia corporations.

                      Another U.S. computer giant, IBM, announced earlier this month the establishment of an Innovative Solutions and Technologies Center at Yerevan State University (YSU). The center is due to modernize the YSU’s laboratory equipment and computer science curricula.

                      The U.S. Agency for International Development and the Texas-headquartered National Instruments inaugurated a similar facility at the State Engineering University of Armenia (SEUA) in September 2013. The $6.2 million Armenian National Engineering Laboratories gave the SEUA’s professors and some 2,400 students enrolled in IT programs free access to state-of-the-art equipment.

                      These facilities are meant to address what IT executives describe as the number one problem facing their burgeoning industry: the still inadequate quality of education at the IT departments of Armenian universities. Most of their graduates are not qualified enough to work for IT companies without undergoing additional training. There are currently an estimated 2,000 job vacancies in the sector, a highly unusual phenomenon for a country that has long suffered from double-digit unemployment.

                      Armenia’s Union of Information Technology Enterprises (UITE) has also been trying to address this problem with extracurricular robotics classes organized in about 60 public schools across the country. “Our objective is to detect in all schools children with engineering talent and help them find jobs in the future,” the UITE chairman, Karen Vardanyan, said in a recent interview. He argued that schoolchildren involved in the classes are learning not only robot design but also broader software development.

                      The UITE, which launched its Armrobotics program financed by several private firms in 2008, is now lobbying the government to gradually open such “study groups” in all 1,400 or so Armenian schools by 2018. The government supports the ambitious $25 million project in principle but has yet to make a final decision to finance it.

                      <<եթե զենք էլ չլինի' ես քարերով կկրվեմ>>