Myths and real things – experts’ opinions about economic activity decline in Armenia
According to the statistical report, the country’s economic activity rose 3% in Jan-July 2016, compared with the same period a year before, while July’s indicator showed a 4.3% year-on-year decline mainly due to a 3.8% contraction in agricultural output to AMD 89.7 billion, 6.8% to AMD 33.6 billion in construction and 1% to AMD 200.5 billion in trade turnover.
The previous year-on-year decline in economic activity in Armenia was recorded at 2.9% in November.
Unlike GDP, economic activity index is calculated from the already sold results of economic activities, not from VAT amounts, and it doesn’t include indirectly calculated net taxes on financial mediation services.
Economists Tatul Manaseryan and Vardan Bostanjyan spoke for ARKA News Agency about causes and possible consequences of economic activity decline in July.
DON’T JUMP TO HASTY CONCLUSION
Manaseryan is convinced that there was no absolute decline in the economy – in July 2016, compared with the previous month, the country’s economic activity index rose 2.5%.
He pointed out a number of factors that affected the year-on-year economic activity index in July 2016.
In his words, the July decline was due to fast economic growth in the previous months.
“First of all, in the previous months a significant economic growth was seen mainly thanks to industry-related segments of the economy, services and agriculture,” Manaseryan said.
According to official statistical reports, economic activity grew significantly in May 2016, when agriculture enjoyed a 5.8% year-on-year growth, industry showed a 9.1% growth and services 5.9%.
Manaseryan pointed out contraction of investments, particularly domestic investment, as another factor of economic activity index decline in July 2016.
The economist also said that some political factors impacted economic activity as well.
“The 4.3-percent decline in the country’s economic activity shows adverse things in the economy, but it would be wrong to jump to a hasty conclusion,” he said.
ECONOMIC ACTIVITY INDICATOR DOESN’T REFLECT REALITY
Professor Bostanjyan, on his side, thinks that Armenia’s economic activity indicator can’t reflect real things amid the lack of competitive environment.
In his opinion, such a decline can only show weakness and instability of the country’s economy.
“For example, the year-on-year economic activity index stood at 6.4% yet in May 2016, while in July 2016, a 4.3% decline was recorded,” he said referring to official statistical reports.
Bostanjyan also said that Armenia’s economy is too small, and even slight fluctuations make changes in macroeconomic indicators.
In the 2016 government budget, GDP growth is projected at 2.2%. --0---