DIRECTOR OF AMERIABANK’S DEVELOPMENT DEPARTMENT: INTERNATIONAL FINANCIAL CRISIS WILL ALSO HAVE CURATIVE EFFECT ON ARMENIAN ECONOMY
Noyan Tapan
Oct 22, 2008
YEREVAN, OCTOBER 22, NOYAN TAPAN. Armenia will not be free from the
impact of the international financial crisis but the impact will be
small as compared with that on developed countries, taking into account
Armenia’s insignificant integration into international financial
markets. Expressing this opinion, the Director of Ameriabank’s
Development Department Tigran Jrbashian said that the effect of
the crisis on Armenia’s financial sector is already seen in the
form of rising interest rates, a slowing process of crediting and
deposit attraction, and a decline in the liquidity of financial
assets. The impact of the crisis will be felt in the real sector
of the economy as well – as a decline in exports and the inflow
of remittances. Nevertheless, in his opinion, Armenia has suffered
from the crisis to a much smaller extent than developed countries,
for example, Russia.
He explained that while having quite serious consequences and
causing complex problems in financial market, the financial crises
also have a curative effect on the real and financial sectors of an
economy. "During a crisis, strong economic entities become stronger,
while weak ones weaken.
Under conditions of falling prices, more efficient bodies start
operating in markets, and markets undergo positive structural
changes. It will happen in Armenia in the next six months," the
expert forecast.
T. Jrbashian noted that the competition field will not form very
quickly in the monopoly sectors of the economy, but these sectors
will face serious challenges in connection with the fall of prices in
international market. In addition, the price growth is also slowing
down in the real estate market, in which investments and sales are
related to the degree of activity of foreign participants in the
market, and investments will flow from the construction sector to
the sectors with a higher level of profitability, which will also
have a healing effect on the economy.
T. Jrbashian expressed an opinion that the Armenian economy’s real
sector, which has problems related to the decline in the inflow of
official transfers and the fall in prices of raw materials exported
from our country to international markets, may benefit from the fall
in prices of foodstuffs and power-bearing subsatnces. He said that
the competition between domestic and foreign producers will increase
in the country’s food market.
In the opinion of T. Jrbashian, no additional capital inflow to the
Armenian banking system is expected in the next few months as there is
a wait-and-see situation in the international financial market. This
was explained by the difficulties related to identifying the real
state of market participants.
"However, by the first quarter of 2009 everybody will understand how
each body endured the crisis and the situation will change. It is
clear that money cannot wait, it has to bring incomes. So in 2009
redistribution processes will start in the international financial
market where Armenia may also play its role because it will get out of
the crisis situation with less losses and in a more stable state as
compared with other countries," T. Jrbashian said. According to him,
more importance will be attached to the availability of stable and
reliable financial instruments, and all this will allow to be more
attractive for investors.
The expert said that however, the Central Bank of Armenia (CBA) will
fail to reach the programmed indices of inflation: by CBA’s alternative
(pessimistic) scenario of inflation forecast, in the 3rd quarter of
2009, 12-month inflation will make about 5% against the basic scenario
of 3.5%, while in the 4th quarter of 2009 it will make 5.9% against
the basic scenario of 5.8%. According to T. Jrbashian, in late 2009,
the 12-month inflation will make 7-8% but the consequences of this
inflation will not be disastrous.
As for fluctuations expected in Armenian currency market, the Director
of Ameriabank’s Commercial Operations Department Sergei Shevchenko
expressed an opinion that these fluctuations will not exceed 10%. For
example, the exchange rate of the Armenian dram against the dollar
will make 300-320 drams within the next 12 months. S. Shevchenko
substantiated his forecast by the fact that the CBA is actively
regulating the foreign currency market where the fluctuations were
insignificant and rare in the past year.