Armenian GDP Continues Robust Growth During H1

by Diego Iscaro

World Markets Research Centre
Global Insight
August 1, 2008

Armenian GDP grew by 10.3% year-on-year (y/y) during the first half of
2008, according to data released by the Armenian National Statistical
Service reported by theBlack Sea Press. This was up from an increase
of 9.8% y/y recorded during the first five months of the year, and
a rise of 9.3% y/y in the period January-April. Monthly figures show
that GDP grew by a 19.1% in June. Output growth during the first six
months of 2008 continued to be driven by construction (up 14.0% y/y),
while there were also a marked increase in activity in the service
sector (excluding trade), which rose by 16.2% y/y. Furthermore, data
also show that retail trade went up by 5.0% y/y, while agricultural
production rose by 8.1% y/y. Finally, industrial production continued
to struggle and waned by 0.3% y/y in the period January-June.

Significance:The Armenian economy continues to grow at a very
strong pace, hinting that the government’s growth target of 10%
output growth for 2008 as a whole may be within reach. Nevertheless,
there are still concerns about the overheating of the economy, as
rapid output growth makes it more difficult to control spiraling
inflation. Furthermore, the robust performance of domestic demand,
reflected in a new acceleration on retail trade growth, is contributing
significantly to the sharp widening of the Armenian trade deficit.