Optimism of the authorities contrary to official statistics: What  will the Armenian economy face?

ArmInfo.Under the most optimistic scenario, Armenia's GDP will grow to 2% by the end of the year. If pessimistic forecasts are confirmed, the economy will collapse to  4-5%.  Economist Atom Margaryan stated this in an interview with ArmInfo.

The Armenian economy is in deep crisis, says Margaryan. And this,  despite the rosy picture from the head of the Ministry of Economy on  ensuring double-digit economic growth in 2021 and assurances from the  chairman of the State Revenue Committee that glimpses of economic  recovery are already visible "as evidenced by the data on the volume  of trade and overfulfillment of the quarterly plan for tax  collections." 

"The authorities are intended to suffer from hopeless optimism.  Meanwhile, the indicators do not inspire optimism.- inflation is on  the rise, there is a massive impoverishment of the population and a  polarization of society, "the expert said.

Atom Margaryan called sophistry the statement that the inflation  recorded for the first quarter at 5.2%, and 5.8%, in March 2021  versus March 2020, will return to the "cherished" 2.5-5.5% by the end  of the year.  "We have already exceeded the permissible threshold  today. And yes, it is possible that inflation will lead to nominal  economic growth, but when it is not comparable with GDP growth, it  indicates that the economy is sick," the economist said.

And this "disease", according to the economist, is due to the absence  of a reasonable economic policy - fiscal and monetary policy remains  within the framework of the frozen petrified logic of the 30s of 20th  century, no industrial, innovation policy has been developed.  Instead, the "velvet power" repeated the mistakes of the previous  government - having declared the mining sector and IT to be the  priority areas of the economy, it did not really develop the  high-tech sector, keeping the country in the status of a raw  materials appendage. "This is due to the lack of education, capacity,  personnel and, of course, political will," he stressed.

Meanwhile, Atom Margayarn advises the authorities to recall their own  election promises - a reasonable profitable policy and competent  allocation of resources, ensuring justice and fighting corruption -  formulations that are not only pleasing to the ears of the voter, but  in fact have a real basis for economic growth. The corresponding  conclusions were not drawn even after the war and the situation with  the pandemic. "We had and still have the opportunity to use even the  situation with the pandemic to develop the economy, for example, to  take advantage of the republic's potential in the field of  pharmaceuticals and try to obtain a license for the production of an  anticovid vaccine," Margaryan said.

Based on this, the expert believes that a variety of scenarios are  possible. Thus, under a pessimistic scenario, which assumes a  continued increase in the incidence of diseases and a delay in the  introduction of the vaccine, the next lockdown could make the  Armenian economy decline by about 4-5%. Under the optimistic scenario  of successfully curbing the pandemic and accelerating the vaccination  process, and without electoral shocks, economic growth could reach 2  percent.

Note that the International Monetary Font expects Armenia's economy  to grow by 1% in 2021, and by 3.5% in 2022. Inflation in Armenia will  be 3.9% in 2021 and 3.2% in 2022. GDP growth in Armenia by the end of  2021, according to the approved state budget, will be 3.2%, inflation  is set at 4% (in the range of 2.5- 5.5%).

The Central Bank of Armenia has revised its forecast for economic  growth for 2021 downward - from the previous 2% to 1.4%.

At the same time, the regulator expects that the government this year  will be more productive in carrying out the planned capital  expenditures, which will allow the economy to recover faster than  expected. The international rating agency Fitch Ratings predicts that  real GDP growth in Armenia will recover to 3.2% in 2021 and to 4% in  2022. The World Bank expects that the Armenian economy will grow by  3.4% in 2021, and by 4.3% in 2022.