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Armenian Prime Minister Lays Out Economic Priorities

Prime Minister Tigran Sarkisian: "Industry, modern technologies, and the information technology sector will be the main engines of economic development."
YEREVAN -- Armenian Prime Minister Tigran Sarkisian says manufacturing, information technology, and infrastructure projects will increasingly replace agriculture and construction as the driving forces of economic growth in the country, RFE/RL's Armenian Service reports.

At his last cabinet session of 2010 on December 30, Sarkisian again described the need for economic diversification as the main lesson learned by the government from the global financial crisis.

"Economic growth is no longer ensured by construction and agriculture...[but instead] industry, modern technologies, and the information technology sector will be the main engines of economic development," he told the ministers.

"The main sectors ensuring growth are industry and infrastructure [projects]," he said. "This will be the main development trend in 2011-2012 as ensuring the diversification of the economy has been the main direction of our anticrisis program."

Official statistics show Armenia's economy expanding by 2.6 percent in the January-November period on the back of an almost 10 percent rise in industrial output. Growth was also boosted by a 6.6 percent year-on-year rise in services other than retail trade, which was essentially flat during those 11 months.

The growth rate was significantly weighed down by a 14.5 percent fall in agricultural production largely resulting from bad weather. A nearly 4 percent contraction of the construction industry was also a major factor.

The industry sector was primarily boosted by rallying international prices for copper and other nonferrous metals, Armenia's chief export. Government critics cite this fact when arguing that the government still has a long way to go in diversifying the economy.

Sarkisian and other top government officials have repeatedly called such diversification a top economic priority. They acknowledge that Armenia had grown too dependent on construction in the years leading up to the global recession, when its economic growth averaged more than 10 percent annually.

Former President Robert Kocharian, who presided over the double-digit growth, strongly disagreed with the widely held belief in March when he launched a veiled attack on the government's anticrisis strategy. Kocharian claimed there is still a "huge" domestic demand for apartments and office space and that the authorities could have used that demand to mitigate the impact of the global recession.

Sarkisian stood by government forecasts that economic growth in the country will accelerate to at least 4.6 percent in 2011. He said the faster growth will be largely generated by sectors other than construction and agriculture.

Sarkisian described the rapid spread of the Internet in Armenia as one of his government's main achievements in 2010. "The number of Internet users [in Armenia] doubled," he said. "It reached 173,000, and if we also include those using the Internet through mobile telephony, the figure exceeds 1.5 million."

"This means that there is now a more favorable environment for the development of information technology in Armenia in 2011, and that is one of the government's top priorities," he added.

Sarkisian also claimed that a series of measures taken by the government since October will "substantially improve the business environment," something that local and Western economists say is vital for the country's sustainable development.

He argued that the government has simplified cumbersome taxation procedures for businesses and reduced the number of economic activities that are subject to state licensing.