Armenian Recession Continues To Deepen; GDP Dropped 9.7 Percent

An industrial factory in Yerevan

An industrial factory in Yerevan

YEREVAN (RFE/RL)–Armenia’s economic downturn deepened further in April, resulting in a 9.7 percent shrinkage of Gross Domestic Product during the first four months of this year, according to the latest official statistics released on Wednesday.

The Armenian economy contracted by 6.1 percent in the first quarter of 2009. The National Statistical Service had registered a year-on-year GDP decline of only 3.7 percent in January-February.

The latest data from the NSS show that Armenia continues to be dragged deeper into recession by its troubled construction and industry sectors. Construction, one of the main engines of the country’s robust growth in recent years, contracted by as much as 42.4 percent in January-April 2009, sharply up from its first-quarter drop of 22 percent.

In an effort to shore up the construction industry, the Armenian government approved last month at least 20 billion drams ($54 million) in credit guarantees for local real estate developers lacking cash to finish their construction projects. The sector’s accelerated decline in April suggests that the measure has had little impact so far.

An almost 11 percent fall in four-month industrial output was the other key factor behind Armenia’s worsened macroeconomic performance. Industry generated about 28 percent of GDP during this period. Its leading export-oriented components, mining and metallurgy, has been hit particularly hard by the global economic crisis. Not surprisingly, Armenian exports tumbled by almost 48 percent to $175.6 million in January-April.

constructionsiteyerevanThe Central Bank of Armenia (CBA) made a further downward revision of its economic outlook ahead of the release of the fresh NSS figures. The CBA said it expects a GDP fall of 5.8 percent this year.

The International Monetary Fund, for its part, forecast earlier this month that the Armenian economy will shrink by 5 percent and will not start growing again until 2011. The IMF has repeatedly praised the Armenian authorities’ response to the crisis.

President Serzh Sarkisian last week again defended his administration’s anti-crisis strategy, saying that it has spared Armenia “serious upheavals” and confounded gloomy forecasts made by his opponents.

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