Downturn In Agriculture Slows Armenian Growth

Farmers deliver grapes to a storage facility in the Ararat Valley

YEREVAN (RFE/RL)—A slump in agricultural production slowed Armenia’s economic growth last month, but it still came in at a solid 6.7 percent in the first half of this year, according to government statistics released on Tuesday.

The reported growth rate was down from 8.8 percent registered by the National Statistical Service (NSS) in the first five months of the year. The country’s economic recovery had progressively accelerated since January when its Gross Domestic Product rose by 2.2 percent year on year.

The NSS data shows that the first-half growth was dragged down by a 13 percent drop in agricultural output, which generated almost 10 percent of GDP during the six-month period. Much of the loss was recorded in June as a result of an early March cold snap and an unusually rainy spring that followed it.

Heavy rain and hailstorms caused serious damage to farmers across Armenia, dramatically pushing up the cost of fruits and vegetables. Some fruits such as apricots and cherries have cost several times more than they did in summer 2009.

The agricultural crisis was more than offset by a 12.3 percent rise in industrial output, the single largest contributor to first-half GDP. That was in turn driven by rallying international prices of copper and other non-ferrous metals, Armenia’s most important export item. Armenian exports were up by as much as 56 percent during the same period.

Growth in other major sectors of the Armenian economy, notably services and construction, was more modest. The construction sector, for example, expanded by 4.1 percent after more than a year of sharp decline, which was the main reason why the economy contracted by 14.2 percent in 2009.

“We can now state for certain that economic growth is a stable trend, and we have serious expectations of a much faster-than-expected growth by the end of the year,” Finance Minister Tigran Davtian told journalists last month. Davtian forecast a full-year growth rate of at least 7 percent.

Vartan Bostanjian, a deputy chairman of the Armenian parliament committee on economic issues, sounded a more cautious note on Tuesday. “There is a positive trend showing that we are not in a situation where we were last year,” Bostanjian told a news conference. “Let this growth not seem stunning to you,” he said.


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