By Atom Markarian
Armenia’s economic growth, which hit a record-high rate of 13.9 percent last year, will slow down to single-digit levels in the coming years, according to the International Monetary Fund.
In its World Economic Outlook released this week ahead of its semiannual joint meeting with the World Bank, the IMF predicts that the Armenian GDP will increase by 7 percent this year and 6 percent in 2005. The document does not elaborate on the forecast which is largely borne out by Armenian government figures for the first quart quarter of 2004.
The fund puts the Armenian growth in the context of what it sees as positive economic trends across the Commonwealth of Independent States. “GDP growth again exceeded expectations in 2003 and is now estimated at 7.6 percent, 1.7 percent higher than projected last September,” its report reads. “GDP growth is expected to moderate in 2004 and 2005 as consumption and investment growth return to more sustainable levels and oil prices ease, but it should nonetheless remain relatively strong by historical standards.”
Armenia is only singled out from among the seven poorest CIS states for its markedly improved “debt indicators.”
The record-high growth rate reported by the government in 2003 was achieved thanks to a construction boom fueled by multimillion-dollar infrastructure projects funded by the Lincy Foundation of U.S.-Armenian financier Kirk Kerkorian. Armenian officials admit that the Lincy money added a few percentage points to the figure. They say the Armenian economy, still reeling from the Soviet collapse, should grow by at least 7 percent this year without further cash injections by Kerkorian’s charity.
The government first-quarter macroeconomic data show a growth rate of 7.5 percent.
In an interview last January, the chairman of the Armenian Central Bank, Tigran Sarkisian, cautioned that the robust growth needs continue for several more years if it is to have a tangible impact on living standards. That is contingent on a radical government overhaul of the country’s banking and insurance sectors, the pension system, and bankruptcy procedures, he said.