Thursday, December 17 2020 15:47

ArmInfo.Armenia, amid martial law and the second wave of coronavirus with a rapid spread, will sum up 2020 with a decline in GDP in the range of 8.5-9.3%. Such a  forecast during an online press conference was given by the head of  the "Ameria" consulting company, a well-known economist Tigran  Jrbashyan, noting at the same time that a particularly large decline  will be in imports, while the decline in exports will continue.

In his opinion, the public is not yet aware of the serious challenges  that this year will have an impact on the economy and will continue  in the medium and even long term.

"This will have a serious impact on the economic policy and the  well-being of citizens, both in terms of the perception of the world  and institutional structures. Since the challenges that Armenia faces  and will face in the near future are more serious than we can  imagine. Armenia is in conditions of " perfect storm " because there  is a crisis in all sectors," he said.

Jrbashyan, at the same time, listed the specific challenges facing  Armenia:  These are problems with human capital, which was in  critical condition even before the current situation, given the  demographic hole in which Armenia found itself starting from last  year. "And this was manifested by a sharp decline in the entry of  young people into the labor market, which is why we had not only a  quantitative, but also a qualitative decline in human capital ",  he  explained. At the same time, in 2022-2023, the population of  retirement age will increase unprecedentedly, which, against the  background of a decline in youth involvement in the labor market,  will lead to a serious burden on the budget - there will be a  significant deficit.

The demographic phenomenon also leads to an educational crisis, since  in conditions of a drop in aggregate demand as a result of a  demographic hole, the education system adapts supply to demand,  thereby reducing the level of quality. And if we also take into  account that it was the generation of this demographic hole that  suffered serious losses during the war (those who died and became  disabled), then this will be one of the main challenges.

Jrbashyan noted that the parameter characterizing the potential of  the economy is the availability of capital, which is currently in a  very difficult situation, especially in the expected difficult  conditions, given the post-war and post-conflict state, when the  country, on the one hand, has a limited volume of private investment  and the growth of foreign investment, and on the other hand,  uncertainty and the expected negative outlook will lead to the  capital outflow.

Moreover, in such conditions, even a large increase in population  migration is possible, which will further deepen the likelihood of an  outflow of human resources and capital. "We need to rethink the  budget and revise the medium-term programs in accordance with the  current situation," he recommends.

"These are the factors that are problematic. And given the complex of  situations that appear in the economy and society, the uncertainty,  which the economic authorities call political, directly leads to the  fact that the public and economic authorities cannot respond to the  expected challenges.

Political uncertainty leads to fundamental difficulties in the  economy, which in turn affect the exchange rate. I want us to  understand: when the amplitude of political uncertainty is small,  there may be a likelihood of impact on the economy in the short term,  but when this uncertainty leads to the inability of the state to  counteract serious economic problems, then this uncertainty turns  into economic factors, " Jrbashyan concluded.