Wednesday, November 13 2013 21:34
Ex-premier Hrant Bagratyan wonders why economic growth in Armenia scarcely reaches 3% amid 15% rise in lending
ArmInfo. On November 13 opposition MP, ex-prime minister of Armenia Hrant Bagratyan asked Chairman of the Central Bank of Armenia (CBA) Artur Javadyan why economic growth in Armenia scarcely reaches 3% amid 15% rise in lending.
"Last year we spoke of 6% economic growth, today the official figure is 3%. According to the European Bank of Reconstruction and Development, this index is 2.5%. In 1996 we outstripped the other post-Soviet countries by GDP per capita, but now our indices are thrice as low as those of the post-Soviet countries. You always say that the assets are growing and the banking sector is developing. Would you be so kind as to explain to me why the economic growth is so low if lending has considerably increased this year? What segments of lending does the matter concern?" Bagratyan asked the chief banker.
Javadyan replied, "You are right, the lending growth rates outstrip the economic growth. But this year the banks' assets have increased less than over the previous years. Over the past 5-6 years the loan book grew by 27%. The provision of crediting to industry, transport, communications, and business is almost equal. Consumer loans are much less. We have rather serious indices for mortgage lending. Since 2009, when Armenia received a Russian stabilization loan, industry crediting has sharply increased. But we are wrong to think that a 30% increase, for instance, can increase the GDP by 5%". Javadyan also expressed his readiness to present in the written form the data demonstrating how much and how these loans have influenced the GDP.
By the CBA's data, in 2012 the Armenian banks' provision of crediting grew by 24.5% to 1.6 trillion AMD ($3.9 bln) by 1 January 2013. In the meantime, GDP grew by 7.2% to 3.982 trillion AMD in 2012. GDP dropped by 14.1% in 2009, rose by 2.2% in 2010 and grew by 4.7% in 2011. As of 1 October 2013, the Armenian banks' provision of crediting totaled 1.696 trillion AMD (11.5% y-o-y growth), and in Jan-Sept 2013 the index grew by 6.6%. In Q1 2013 GDP dropped by 45.6% to 722.5 bln AMD, and in Q2 2013 it was up 28.1% to 900.7 bln AMD. In Jan-Sept 2013 the economic activity of Armenia was up 3.2%, and in September alone it rose by 10.3%. The key drivers of the monthly growth were construction, agriculture, trade, and industry.
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