Armenia's Economic Pulse

[Mher]

Re: Armenia's Economic Pulse

Armenia’s economy growth may reach 3.3% in 2015 - IMF

YEREVAN, December 5. /ARKA/. Armenia’s economic growth may reach 3.3% in 2015if the respective policies are implemented by the government, IMF’s resident representative to Armenia Teresa Daban Sanchez said.

Global market developments will affect Armenia, Sanchez told a press conference on Wednesday.

IMF’s initial projection for Armenia was 2.6% economy growth for 2014, but the country’s potential is much higher, she said.

Focusing on the next year would be a more pragmatic approach for Armenia, Sanchez said. She also noted Armenia’s economic growth is influenced also by the Russia market situation.

IMF projects a 0.5% GDP growth in 2015 for Russia that has one of the biggest economies in the region. But this projection may be revised downward, she said adding the Russian authorities are considering even a possibility of a 0.8% decline.

In this respect, there are two important factors influencing the Armenian economy – private transfers from Russia and exports, Sanchez said.

“A quite complicated situation is expected next year as the Russian economy is not in a very good condition and this may affect remittances and exports”, the IMF resident representative said.

Transfers continue increasing by lower rates than before, and certain reduction in exports is seen amid dropping global demand, she said.

According to the Central Bank of Armenia, private remittances to Armenia through the country’s banking system amounted to over $161.6 million in October, a reduction of 17.1% compared to October 2013.

Transfers from Russia only were about $137.5 million in October, a decrease of 19% compared to October 2013 and a 6% reduction against the month before.

Official statistics say Armenia’s exports were $1,250 million in January-October (2.9% increase) and imports were about $3,626.5 million (3.8% increase). Hence, negative trade balance was $2,376.58 million.

Sanchez pointed out that if local demand is low, then it is time now for offering more stimulus for the economy through budget expenditure items, including capital expenditures.

Sanchez stressed the importance of infrastructure reforms and said IMF is focused on several sectors, including tax administering, favorable business environment, reforms aiming at better financial accessibility and energy reforms.

Armenia’s economy growth is 5.2% in 2014 budget and the budgeted real GDP growth level is 4.1% for 2015. –0--

15:20 05.12.2014

http://arka.am/en/news/economy/armenia_s_economy_growth_may_reach_3_3_in_2015_imf/#sthash.J6s5q10p.dpuf

[Mher]

Re: Armenia's Economic Pulse

Mher, when do you think the Russian situation will stabilize? I know this is just a shot in the dark, but do you think its gonna hit Armenia hard and hinder economic growth? Bring in a recession?

Would you also agree that this is the result of dependence on Russia, and issues in the world economy? If something does happen, say something worrying, do you think Armenia might be able to learn from this experience, and allocate resources to lessen its economic dependency on remittances

Here are the levels:

-Nothing-

-Fluctuation-

-Economic hiccup-

-Moderate decline in economy-

-Recession-

-Crisis-

-Bankruptcy-

-Devastation-

I don't want to pretend to be an economic expert. Just looking at the number I think it's going to have a negative effect, but not devastating effect. It's not as if Russia's economy was doing okay even before the Ukraine crisis. Russia's private sector has lost jobs for 17 months in a row. So there the level of drop from stagnation to recession is not that sudden. They revised their 2015 forecast based on$80/barrel oil and are now predicting -0.8% GDP decline. However like Armenia the govt predictions are usually too optimistic. The Chief Economist of Russia HSBC just said they are predicting a GDP decline of -1.5%. Considering 15-20% of Armenia's GDP is from remittance from Russia and those remittance are decreasing 15-20%, just at that level, Armenia's economy would lose about 3% GDP. Still IMF is predicting a 3.3% growth. So I think at worse our economy will stagnate and grow at a small 1-2% rate. So even though it sucks that the results of some good economic policies and developments of the past few years are not coming to fruition due to external factors, we should still be okay as far as avoiding recession. The bright side is though these new oil prices are hurting us a little indirectly through Russia, they are going to devastate the mongols and the mongol military to the east.

[Chubs]

Re: Armenia's Economic Pulse

I don't want to pretend to be an economic expert. Just looking at the number I think it's going to have a negative effect, but not devastating effect. It's not as if Russia's economy was doing okay even before the Ukraine crisis. Russia's private sector has lost jobs for 17 months in a row. So there the level of drop from stagnation to recession is not that sudden. They revised their 2015 forecast based on$80/barrel oil and are now predicting -0.8% GDP decline. However like Armenia the govt predictions are usually too optimistic. The Chief Economist of Russia HSBC just said they are predicting a GDP decline of -1.5%. Considering 15-20% of Armenia's GDP is from remittance from Russia and those remittance are decreasing 15-20%, just at that level, Armenia's economy would lose about 3% GDP. Still IMF is predicting a 3.3% growth. So I think at worse our economy will stagnate and grow at a small 1-2% rate. So even though it sucks that the results of some good economic policies and developments of the past few years are not coming to fruition due to external factors, we should still be okay as far as avoiding recession. The bright side is though these new oil prices are hurting us a little indirectly through Russia, they are going to devastate the mongols and the mongol military to the east.

The amount the remittances make up is between 9-15 (1 billion- 1.5 billion) percent, not up to 20. (I believe its actually somewhere around 13 percent, but its not a reliable number at all considering its made up of private transactions from foreign countries and migrant workers who jump between jobs.) I agree, it does seem as if it will hinder growth, but not throw Armenia back to the stone age. The amount of people in Armenia going to be effected by the ruble crash is going to be anywhere between 300-450 thousand people, considering there are around 150,000+ migrant workers in Russia.

[armnuke]

Re: Armenia's Economic Pulse

The amount the remittances make up is between 9-15 (1 billion- 1.5 billion) percent, not up to 20. (I believe its actually somewhere around 13 percent, but its not a reliable number at all considering its made up of private transactions from foreign countries and migrant workers who jump between jobs.) I agree, it does seem as if it will hinder growth, but not throw Armenia back to the stone age. The amount of people in Armenia going to be effected by the ruble crash is going to be anywhere between 300-450 thousand people, considering there are around 150,000+ migrant workers in Russia.

Only around 150,000 migrants in Russia? I read somewhere that there are 2.5 million Armenians in Russia.

[Mher]

Re: Armenia's Economic Pulse

The amount the remittances make up is between 9-15 (1 billion- 1.5 billion) percent, not up to 20. (I believe its actually somewhere around 13 percent, but its not a reliable number at all considering its made up of private transactions from foreign countries and migrant workers who jump between jobs.) I agree, it does seem as if it will hinder growth, but not throw Armenia back to the stone age. The amount of people in Armenia going to be effected by the ruble crash is going to be anywhere between 300-450 thousand people, considering there are around 150,000+ migrant workers in Russia.

Sorry my mistake, all remittance accounts for 15-20 percent, and 86% of this is from Russia
Overall Remittance to Armenia stood at $1.87 billion in 2013 (18% of GDP), and 1.6 billion of this was from Russia (15% of GDP)

http://asbarez.com/119731/armenians-deported-from-russian-will-worsen-unemployment/

There are other sources that post similar numbers

[Mher]

Re: Armenia's Economic Pulse

Only around 150,000 migrants in Russia? I read somewhere that there are 2.5 million Armenians in Russia.

There are 150-200 thousand temporary workers that go and come back
but the overall numbers of Russian-Armenians is in the millions

[Mher]

Re: Armenia's Economic Pulse

AMD lost another percent of value against the Dollar and Euro today. It's now lost about 12% of it's value in the past 40 days after almost no movement for two years.

[Haykakan]

Re: Armenia's Economic Pulse

A weakening currency is great for exporting businesses and bad for importing businesses.

[londontsi]

Re: Armenia's Economic Pulse

.

Unlike major currencies which are afloat and the market sets the exchange rate,
smaller countries it is the country central bank that sets the exchange rate.

It is done in a manner to be advantageous to itself, like reducing pressure on its currency reserves etc.

[Haykakan]

Re: Armenia's Economic Pulse

Small countries can let it float to. Manipulating your currency has costs like you need to keep large sums of reserves of other currencies as well as yours but more importantly when you use monetary policy to regulate the currency then you cannot use it to stimulate aggregate demand in the short run. I would like to study some economic history on Armenia since independence..anyone have any idea where I can get some info?