YEREVAN (RFE/RL)–Economic growth in Armenia will reach to 4.6 percent this year and accelerate to almost 5 percent in 2012, the World Bank said in its annual global economic report released on Thursday.
The forecast for 2011 matches growth projections made by the Armenian government and included in its state budget. The Armenian economy was on course to expand by around 3 percent last year following its sharp contraction in 2009.
The World Bank said the economy will continue to benefit from increased international prices of non-ferrous metals, Armenia’s number one export item. It also pointed to rising remittances from Armenians working abroad and Russia in particular.
“Economic activity within the Commonwealth of Independent States will also be supported by the recovery in Russia, a major export market and important migrant destination country within the sub-region. Armenia, Moldova and Tajikistan, in particular, are expected to benefit, among others,” reads the report.
President Serzh Sarkisian predicted late last month that the country will fully emerge from recession next year. He said his government has “stabilized” the economic situation and learned the right lessons from the global financial crisis.
His prime minister, Tigran Sargsyan, predicted on Thursday continued robust growth in industry and its food-processing sector in particular. He said the government has exempted equipment imported by 14 mostly food-processing companies from value-added tax in order to help them expand production this year.
Speaking at a weekly session of his cabinet, the prime minister also emphasized the fact that interest rates set by Armenian commercial banks fell by 2-3 percent in 2010. “There have never been such cheap credit resources in Armenia,” he claimed. “Secondly, the volume of lending has increased drastically.”
“Now banks are looking for businesses ready to borrow. So the situation has changed dramatically,” added Sargsyan.
For his part, Gagik Minasian, the chairman of the Armenian parliament committee on finance and economics, said output in the domestic agricultural sector should rise by 10 percent in 2011. The sector shrunk by over 14 percent in 2010, significantly slowing the country’s economic recovery.
Speaking at a news conference, Minasian said a key challenge for the authorities now is to curb consumer price inflation that exceeded 8 percent in January-November 2010. He admitted that it partly resulted from a lack of competition in some sectors dominated by wealthy government-linked businessmen. “We also have corruption of fairly large scale,” added Minasian.