Vardan Bostanjyan forecasts zero economic growth in Armenia in 2016

ArmInfo. Armenia will have zero indicator of economic growth at the year-end, MP of National Assembly, economist Vardan Bostanjyan forecasted at the today's press conference.

"National Statistical Service of Armenia using various approaches and methods was registering figures, based on which one can talk about favorable economic situation. And suddenly economic activity falls from 3.5% to 0.4%. It turns out that the previous calculations did not reflect the real situation and were inconsistent", he stated. In this light the economist noted that the current government intends to present the real situation to society referring to the recent statement by the Prime Minister about tough economic situation. "The new government's approach in this issue is welcomed", he stated.

In the expert's opinion 3.2% growth in Armenia forecasted by international structures is not realistic.  Having insignificant amounts of trade turnover Armenia could reach such figures only in case of efficient struggle against shadow economy and corruption. Touching upon Armenia and Russia's Presidents' statements about high indicators of economic growth in Armenia the economist said that talking about economic growth is inappropriate considering a number of factors, which demonstrate quite other situation.

In this light Bostanjyan first and foremost noted budget underperformance that has already totaled 80 bln drams and according to his forecast this figure will reach 100 bln drams by the end of the year. At the same time according to the draft budget of the next year it is planned to cut expenditures by 17 bln drams, which is an additional factor of risk for Armenia. According to the expert the draft budget of 2017 should be more realistic and cautious considering that it does not envisage increase of wages, pensions and aids.

Answering to ArmInfo's correspondent's question Bostanjyan harshly criticized the new Tax Code considering it a factor that has a negative impact on Armenia and particularly on economic entities.  According to Bostanjyan the new tax document is dictated by international structures and financed by them.  "Although the new Tax Code has some positive elements and focuses on systematic approach it threatens business. "I am against such a pressure and in my opinion the document should be revised", he summarized.

To recall, International Monetary Fund (IMF) has upgraded its forecast for Armenia's economic growth in 2016 to 3.2% versus earlier forecasted 2.25-2.5% with further acceleration of growth to 3.4% in 2017. Besides, IMF forecasts deflation of prices in Armenia by 0.5%. World Bank upgraded its forecast to 3.1 GDP growth for Armenia in 2016 versus earlier forecasted 1.9% with further acceleration to 3.3-3.6% in 2017-2018.  EBRD forecasts economic growth to 2% in 2016. The Central Bank of Armenia revised its economic growth forecast for Armenia in 2016 from the previous 2.6- 3.4% to 1.3-1.8%.  The state budget of Armenia fixed 2.2% GDP growth in 2016. According to the National Statistical Service of Armenia GDP growth in Armenia in 2015 totaled 3% versus 3.5% in 2014. According to the statistical data economic activity in Jan-Oct 2016 grew by 0.4% y- o-y versus 3.5% growth in the same period of 2015 and growth was ensured mainly due to field for services (7.7%) and industry (6.5%).  According to the Finance Ministry economic growth will make up 3.2%, deflator index - 1.7, and the deficit - 150.1 bln AMD. In 2017, the GDP deflator will make up about 101.7%. The budget 2017 revenues are expected to grow by 27 bln AMD to 1 210 bln AMD, and the expenditures are expected to decline by about 13 bln AMD to 1 360 bln AMD (22.4% revenues-to-GDP ratio). In the structure of revenues, tax revenues and state duties will amount to 1 135 bln AMD (versus 1 065 bln AMD in 2016).