World Bank warns of slowdown in Armenian economy

The World Bank predicts 4.3% growth for the Armenian economy in 2019, but the government of the country is counting on higher rates.

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The World Bank’s forecast

The World Bank (WB) notes in its report on the state of the Armenian economy that GDP growth will slow down, but will maintain steady rates.

Moreover, the economy may be adversely affected by processes in the region and a slowdown in global economic growth. In particular, the volume of exported goods and services will decrease.

World Bank experts cite the following reasons for slowing growth:

“Due to increased tension in political circles and in the sphere of international trade in the partner countries of Armenia, an economic downturn may occur or deepen. Domestically, economic reform may be faced with personal interests and expected high costs.”

The report also says that without targeted reforms, job and wage growth is unlikely, as is the resolution of social or investment issues. If the Armenian government fails to achieve significant success, political and social tension may flare up in the country again.

World Bank experts further stated that, in spite of the fact that social indicators have improved, there are still many people in the country who live in poverty. However, the unemployment rate has fallen to 15.7 per cent in 2018. This is the best indicator in the last 10 years.

Plans of the Armenian government

The government of Armenia plans a 4.9% growth in GDP for 2019.

Moreover, in its five-year government programme, GDP is projected to grow by at least 5 per cent per year.

In the coming years, a significant reduction in poverty and unemployment and an increase in the pace of exports is expected. The emphasis is on the effectiveness of the fight against corruption and the reduction of the shadow economy.

Furthermore, Prime Minister Nikol Pashinyan believes that the Armenian economy should no longer be focused on the extraction of raw materials:

“The government’s activities will focus on creating a competitive and comprehensive economy in the Republic of Armenia, one focused on the export of high-tech industrial goods and having high environmental standards.”

Pashinyan also called on the residents of Armenia to assist the government in the implementation of the “economic revolution”.

“We are currently doing everything to reduce interest rates on loans, which have become more affordable for citizens. We also encourage people … to try to organize some economic activities for themselves. We will also create opportunities for people to be retrained, as there are currently 3-4 thousand vacancies in the IT sphere in Armenia. We must therefore help those who are capable of being retrained in order to fill these vacancies, as salaries in this sphere are very high.”