Accessibility links

Breaking News

Armenian Economic Growth In 2010 Fueled By Industry

Prime Minister Tigran Sarkisian says the economy is no longer dependent on construction for growth.
Prime Minister Tigran Sarkisian says the economy is no longer dependent on construction for growth.
YEREVAN -- Armenia's economy grew 2.6 percent last year as it rebounded from a sharp decline in 2009 caused by the global financial crisis, RFE/RL's Armenian Service reports.

Official statistics released January 26 show Armenian growth in 2010 was driven primarily by industry and the mining sector, which benefited from a rally in prices for nonferrous metals.

Data from the National Statistical Service (NSS) show industrial output -- which accounts for about a quarter of Gross Domestic Product – rose 9.7 percent.

Overall, the economy expanded more than 6 percent in the first half of 2010, but growth slowed later in the year because of a 14.5 percent drop in agricultural output due to bad weather. Continued weakness in the construction sector was also partly responsible for the slowdown.

Addressing officials from the National Competitiveness Foundation on January 22, Prime Minister Tigran Sarkisian said there were "very serious changes" in the structure of the economy. He said economic growth was no longer excessively dependent on construction, which was the main driving force before the global economic crisis.

The economy’s heavy dependence on construction was widely seen as being responsible for a more than 14 percent fall in GDP in 2009.

For this year, the government, the International Monetary Fund, and the World Bank expect GDP to grow 4.6 percent this year. The World Bank said growth could reach almost 5 percent in 2012.

"We had really positive and negative indicators last year," Gagik Minasian, the chairman of the parliament's Finance and Economy Committee, told RFE/RL on January 26. As positives, he pointed to industry’s increased share of GDP and the more than 41 percent surge in exports reported by the NSS.

On the negative side, Minasian singled out an inflation rate of 9.4 percent, the highest in many years. He attributed the rise in prices to many factors, though acknowledged a lack of competition in some sectors had aggravated the problem.

Artsvik Minasian, an economist and deputy from the opposition National Congress (HAK), gave a more negative assessment of the economic situation.

“When we look at real life and people's living standards, we see there has been a regression,” he said.

Minasian told RFE/RL that the modest growth in 2010 only benefited "oligarchs and the state budget" and that no genuine economic diversification is under way.

"The Armenian government is not ready and willing to make radical changes in its socioeconomic policy," he said.

Another opposition force, the Armenian National Congress (HAK), was also highly critical of the authorities' economic policies.

In a written statement, HAK alleged that the policies are aimed at "strengthening the oligarchy and monopolies and eliminating the class of small and medium-sized entrepreneurs." It also said socioeconomic tensions in Armenia have risen lately -- an apparent reference to a recent series of unpopular economic decisions taken by the government.

The statement said the governing board of HAK, led by former President Levon Ter-Petrossian, met January 26 to discuss the alliance's further steps “in this context.” It did not elaborate.