World Bank Forecasts Lowest Growth In Armenia Since 2010

YEREVAN (RFE/RL) — The World Bank expects Armenia to have this year the lowest economic growth since 2010. The Armenian government, however, appears to be more optimistic in its GDP growth outlook for 2016.

In a recently published monthly economic update the World Bank notes that GDP growth in Armenia slowed to 3 percent in 2015 and is projected to remain sluggish at 2.5 percent in 2016, which is the lowest growth outlook for Armenia compared to the previous five years.

According to the World Bank, such low economic growth and projection are due to continued recession in Russia and structural weaknesses of the Armenian economy.

Armenian Prime Minister Hovik Abrahamian implied, however, that his government remained more optimistic in its GDP growth projections when he answered the RFE/RL Armenian Service’s question on the current state of economic affairs in the country on Saturday. “We are going to move the economy forward, and I want to repeat that our success hinges on our unity,” he emphasized.

Government officials in Armenia today try not to remember President Serzh Sarkisian’s warning made in 2013 that the cabinets that fail to ensure an annual growth of at least 7 percent until 2017 will have to resign.No government since then has managed to fulfill the task, while growth figures have kept lowering.

The following excerpt from the World Bank report also prompts that the state of economic affairs in Armenia is not particularly good.“… Non-performing loans soared from 3.7 percent at the beginning of 2015 to above 9 percent towards the end of the year. Higher dollarization and currency mismatches in the balance sheet pose risks to banking sector stability and profitability. Total lending declined in 2015 by 3.1 percent.”

The international financial institution also sees a problem in terms of maintaining public revenues. “Actual revenue collection in January 2016 was lower than a year ago, reflecting the trend of a continued decline in imports. The fiscal pressure observed last year may be experienced again in 2016 if the January trend continues,” the World Bank report reads.