Yerevan, 5 May 1999 (RFE/RL) -- The Armenian economy expanded during the first three months of the year in spite of an ongoing decline in industrial output caused by the crisis in Russia.
Official statistical information for the first quarter shows Armenia's gross domestic product (GDP) rose 4.6 percent from the same period last year. Consumer prices, on average, fell 3.9 percent in the first three months.
Finance Minister Eduard Sandoyan told a news conference yesterday that, in his words, "the main achievement is that we have saved our market from the effects of the [Russian] crisis and kept up [economic] development."
He said the government's tight macroeconomic policies coupled with Armenia's economic "re-orientation towards the European Union" have been the main mitigating factors.
The economy expanded more than 7 percent last year, helped by strong performances in the construction and agricultural industries. That growth came in spite of a 2.5 percent decline in industrial output triggered by the Russian economic crisis. Many Armenian companies have lost their Russian markets.
Although the economy is still expanding, the Russian crisis has resulted in a deterioration in Armenia's trade account. A fall in Armenian exports to Russia was the main cause in the country's almost $600 million trade deficit last year.
Sandoyan says that on the positive side, however, the European Union pulled ahead of the Commonwealth of Independent States as Armenia's leading trade partner, with turnover amounting to about $335 million.
Sandoyan used the relatively good results to warn political opponents against the use of a populist rhetoric in the run-up to the parliamentary elections scheduled for May 30. Many parties and candidates call for a larger government role in managing the economy in order to capitalize on widespread disillusionment with reforms.
He said that any change of economic policy may put an end to prospects of development. He said the only option for countries like Armenia is to form a legal and political framework to attract investment.
The government says direct foreign investment in the economy totaled $240 million last year, more than during the previous several years taken together.