Economic Growth in 2010 Only Benefited Armenia’s Oligarchs, Says Minasian

YEREVAN (Combined Sources)–A 2.6 percent growth in Armenia’s economy in 2010 reported on Wednesday by the National Statistical Service only benefited “oligarchs and the state budget,” while normal people experienced a sharp decline in wages and living standards, an economist and parliament deputy from the opposition Armenian Revolutionary Federation said Wednesday, RFE/RL’s Armenian Service reported.

“When we look at real life and people’s living standards, we see that there has been regress,” Artsvik Minasian said. Earlier this week, he spoke to reporters at a press conference, where he discussed the disparities between the NSS reported inflation rate of 9.4 percent and real inflation figures estimated at 12 percent.

“The hand-to-mouth subsistence, on which inflation rates are estimated today were calculated in 2005. Consumers’ behavior has changed a great deal since then, but this is not taken into account in calculation of inflation,” he said, ARKA news agency reported. “The fluctuations in foreign exchange rates are also not taken into account and studies on certain goods are conducted before the actual increase in their prices.

Armenian Prime Minister Tigran Sargsyan, however, took a different spin on things. Speaking to officials from the National Competitiveness Foundation on Wednesday, he predicted accelerated economic growth in the year ahead stemming from what he called “very serious changes” in the structure of the Armenian economy that will yield double the amount of growth projected by his government in late 2009.

Sargsyan argued that the economy is no longer excessively dependent on construction, the main driving force of pre-crisis growth. That dependence has been widely blamed for a more than 14 percent fall in GDP in 2009. His government, as well as the International Monetary Fund and the World Bank expect GDP growth to accelerate to 4.6 percent this year. The World Bank has said it could reach almost 5 percent in 2012.

The NSS report did, however, highlight that throughout 2010 the Armenian economy’s renewed growth was primarily driven by industry and, in particular, its mining sector, which strongly benefited from a rally in international prices of non-ferrous base metals. Data from the NSS show the country’s industrial output, which generated almost one-quarter of Gross Domestic Product, rising by 9.7 percent.

According to the NSS statistics, overall economic growth exceeded 6 percent in the first half of 2010 and slowed down significantly in the following months because of a 14.5 percent drop in agricultural production caused by bad weather. A continuing crisis in the Armenian construction sector was also responsible for the slowdown played down by the government.

Minasian pointed to the concentration of economic activity in mining and industry as further as proof that Sargsyan’s government has made no genuine effort to diversify the economy. “The Armenian government is not ready and willing to make radical changes in its socioeconomic policy,” he said.

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2 Comments

  1. Ed said:

    I think it is best that the government should get an active role to create jobs for the people. The government can create its own production industry and compete with the private section, or the government can create factories and sell as stocks to people or rent them to private section

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