Manaseryan: 2018 was the most difficult in the entire history of  independent Armenia in economic terms

ArmInfo.The year 2018 was the most difficult for Armenia in economic terms for all the years of its independence due to the political processes in the country and  their impact on the economy. Such an opinion in the report <Armenian  Economy in 2018 and priorities in the context of the country's  membership in the EAEU> expressed a member of the Eurasian Expert  Club, Professor Tatul Manaseryan.

According to the expert, not only the "velvet" revolution affected  the economic processes, but also the republic's transition to a  parliamentary system of government and the replacement of three prime  ministers. Pointing out that the new parliament adopted the state  budget for 2019 Manaseryan noted that the economic growth in 2019  could reach 4.9%, and the increase in prices - 2.7%. However, he does  not exclude that during the year the budget will be finalized.

"The high growth of the Armenian economy in 2017 - 7.2%, created a  backlog for stimulating GDP growth in 2018. Thus, in the Q1of last  year, GDP growth was 9.7%. Later, the growth rates began to decline.  A serious impact on the reduction of growth rates agriculture, which  began to show an obvious tendency of recession since mid-summer. As a  result, GDP growth dropped to 7.5% in the Q2.The change of power in  the country did not greatly affect its economy, however, already in  the Q3, the recession tended to deepen, with the result that  Armenia's GDP in terms of this quarter was only 2.7%. In general, for  9 months the growth of the republic's GDP reached 6.6%, despite the  fact that this year's figure fixed by the budget was 4.5%. However,  according to the forecast of the Central Bank in 2018 in Armenia,  economic growth was expected to 4.6 - 5.1%, and according to EBRD -  up to 5.5%, IMF - up to 6%, on the WB - up to 5.3%, on the ADB - up  to 5.3%, and on Fitch - 5% ", Manaseryan listed.

He is convinced that the additional economic growth above the  forecasted is also the result of Armenia's membership in the EAEU,  which strongly contributed to the export of agricultural products and  finished consumer goods. Also among the achievements of 2018 within  the framework of Eurasian integration can be attributed, he pointed  out, the conclusion between the EEU and Iran of a temporary agreement  on the creation of a free trade zone. And in 2019, negotiations on  the creation of free trade zones will continue with Singapore,  Israel, India, Egypt and Serbia.

"It is important to note that now the member countries of the EAEU  are working on the formation of a single pension space, in which the  mandatory pension component is supposed to be used. From July 1,  Armenia switched to the mandatory pension system, which applies to  citizens born after January 1, 1974.  The system was introduced on  January 1, 2014, but operated only for public servants. From the  middle of the year, the system became mandatory for all. At the same  time, to mitigate the implementation of this system, the government  decided to change l ratio of payments from the state to employees If  earlier contributions to the pension fund were made on an equal  basis, since July the state's share in the mandatory accumulative  pension system increased by 5%, reaching 7.5%, and the share of  citizens decreased by 5% to 2.5%. The government of the RA will  allocate 56 billion 779 million drams (by 14 billion more than in  2018.) to contributions to the accumulative pension system. It is  expected that the cumulative part of the pension will provide  additional GDP growth of 2-3% [3]. The table below presents summary  indicators of the development of the Armenian economy in 2018, "the  economist recalled.

Returning to the economic indicators of the past year, Manaseryan  noted that in January-December 2018 the economic activity index grew  by 5.8%, which was promoted by the growth in the volumes of  industrial output, construction, trade and services rendered to the  population. The volume of gross agricultural production has  decreased. In particular, the volume of industrial output grew by  4.3%, construction - by 4.5%, trade turnover - by 8.7%, and services  - by 18.8%. Gross agricultural output declined by 7.6%. The reason  for this decline in this industry, he said, is well known - the  problem associated with the water intake from Sevan, which, correctly  or not, has caused significant damage to irrigated agriculture.

"Registered economic growth can be considered satisfactory, even  good, due to the tangible regress in the mining industry, reduction  in the scope of work on the construction of the North-South highway,  the introduction of legislative restrictions in the gambling  business, which were the main drivers of economic growth last year.  In addition, the new government, according to the law approved by the  Parliament, forgave drivers fines and penalties for traffic  violations. Citizens were exempted from a number of fines for  administrative offenses, which also reduced budget revenues. A  certain "amnesty" was announced and for the debtors of the financial  system, in particular, Armenian banks were allowed to write off  overdue fines for violating the credit obligations of those  individuals whose debts were deemed bad until May 31, 2018.  Banks  were allowed not to pay tax from profits from fines and penalties  from which they refused, whereas previously they were obliged to pay  tax regardless of the collection of fines. Exemption from fines does  not mean exemption from paying the principal amount of the loan.

In exchange, the current government is building a new high-tech  economy development strategy and export-oriented competitive  manufacturing. In this regard, the point of view of the adviser to  the President of the Russian Federation, Academician Sergey Glazyev,  is important, according to which Armenia can restore its leading  position in the EAEU in the areas of tool industry and computer  equipment, paying attention to industrial cooperation with the EAEU  countries on technological development. In his opinion, Armenia is  rightly considered to be a highly developed country in the  post-Soviet space, in which the foundations of the machine-building  industry, computing technology, and sophisticated technologies have  been forming for decades. And this important role of the Armenian  economy even in Soviet times was based on cooperation with the  participation of hundreds and even thousands of enterprises.  Therefore, it is necessary to expand cooperation between the  countries and restore the function of the leader, which has become  traditional for the Armenian economy in the fields of instrument  engineering and computer technology. And the structures necessary for  cooperation are already in place. ", Tatul Manaseryan said.  Finally,  the expert summarized that certain positive trends in improving the  social status of the population were also noted in the country. In  particular, compared to 2017 at the end of 2018, the poverty level of  Armenia amounted to 25.7%, showing a significant decrease of 3.7%,  which is mainly due to economic growth.