Wednesday, March 27 2024 13:49

ArmInfo.The sharp acceleration in the growth of economic activity in February of this year in Armenia is due to a short-term factor, reads a report by the Luys Foundation, whose experts analyzed the data of the RA Statistical Committee for January-February 2024.

As the Fund's experts note, the economic activity rate in February  was 16.3%, which, however, was mainly due to a sharp increase in  jewelry production. "This is dangerous because the jewelry industry  is completely dependent on external factors that are unpredictable,  and due to a sudden change in the external environment, a complete  cessation of activity in this market is possible.

Along with the high rates of industrial growth due to the jewelry  sector, some sectors of the manufacturing industry, which are  important for the economy of the Republic of Armenia, continue to  decline. In particular, in food, tobacco, clothing, chemical and  chemical products in January 2024, there was a decrease in production  volumes year on year. It turns out that the types of relatively  stable and long-term activities of the manufacturing industry are  declining, while short-term activities are increasing significantly,  worsening the structure of foreign economic activity," the Fund's  statement notes.

It is noted that the jewelry and cutting industry more than doubled  due to the growth of the jewelry production industry. "Of course, an  increase in export volumes is at least a positive factor, in the  sense that there is an influx of foreign currency into the economy,  but if we take into account that in this case we are simultaneously  dealing with almost the same volumes of imports, this positive effect  is significantly neutralized.

The most significant issue is that against the backdrop of high  growth rates, existing problems in the field of exports are relegated  to the background, in particular, a decrease in export volumes of a  number of goods. In January, in particular, export volumes for such  product groups as "finished food products" and "animals and products  of animal origin" decreased; a significant drop in exports of mineral  products is also problematic," the report notes.

It is noted that in conditions of accelerating economic growth, tax  revenues are growing at a rather slow pace. In January-February 2024,  the growth in tax revenues amounted to 7.9%, and if the indicators of  income tax returns are comparable with the indicators of 2023, the  growth will be only 3.7%. "Naturally, this is a concern given the  increase in spending by more than 30%, as well as the government's  policy goals of increasing the tax-to-GDP ratio. In this regard, the  government should intensify efforts in tax administration of jewelry  activities, which will allow it to more effectively manage the growth  rate of this type of activity on the one hand, and help increase tax  revenues on the other hand," the authors of the study believe.

According to official statistics, in Armenia, the growth of economic  activity in January-February 2024 accelerated to 13.6% per annum  (from 10.9% in the same period in 2023). The growth driver was the  industrial sector. As preliminary data from the RA Statistical  Committee indicate, this was accompanied by a noticeable acceleration  in the upward dynamics of exports and imports. Despite the fact that  the preliminary statistical report does not provide for the  disclosure of more detailed information, nevertheless, judging by the  data of previous months, it can be assumed that high growth in the  industrial sector comes to a greater extent from the jewelry  industry, and to a slightly lesser extent from the leather industry,  woodworking industry, production of