World Bank Downgrades Armenia’s Growth Outlook


By MassisPost
Updated: March 31, 2015

YEREVAN (RFE/RL) — In a significant downward revision of its earlier
projections, the World Bank said on Tuesday that economic growth in
Armenia will likely slow to just under 1 percent this year due to
spillover effects of a recession in Russia.

The bank forecast late last year that the Armenian economy will expand
by 3.5 percent in 2015 — as fast as it did in 2014, according to
official statistics. The Armenian government was even more upbeat,
forecasting a growth rate of 4.1 percent.

Laura Bailey, the head of the World Bank’s Yerevan office, said
that the figure is unlikely to exceed 0.8 percent. She warned that
even this growth projection could prove overly optimistic in case
of a deeper-than-anticipated crisis in Russia or renewed drastic
fluctuations of the Armenian dram’s exchange rate.

“I don’t have a forecast for what will happen with the dram,” Bailey
told a news conference. “What I am trying to communicate is that
if there were sharp, abrupt changes either direction, that can be
disruptive to exports and trade.”

“That’s what we worry about, not as much whether the dram were to
weaken a bit more gradually or strengthen but the sharpness,” she
said, cautioning against a repeat of a brief currency crisis that
hit Armenia in December.

The Armenian currency weakened by roughly 18 percent against the U.S.

dollar in November and December amid falling remittances from Armenians
working abroad and Russia in particular. Its exchange rate has been
largely stable so far this year.

Deputy Prime Minister Vache Gabrielian seemed to acknowledge on Monday
that the government too will have to revise its projections downwards.

“The government has never said that there will be no changes in the
[forecast] indicators,” he told reporters. “There will be discussions
[in the government] soon. I will present forecasts to you as soon as
those discussions are over.”

“We are going to have less growth than was projected,” said Arsen
Ghazarian, the head of Armenia’s largest business association.

“Forecasts range from 0.5 percent to 2 percent.”

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