Monday, June 27 2022 17:58
Karine Melikyan

Service sector is main driver of double-digit economic growth in  Armenia

Service sector is main driver of double-digit economic growth in  Armenia

ArmInfo.In Armenia, the growth of economic activity accelerated in January-May 2022 to 10.2% per annum (from 4.3% a year earlier), which is accompanied by high growth rates  of exports and imports. In May of this year, by May 2021, economic  activity accelerated growth to 13% (from 10.9% a year earlier), while  increasing by 6.1% in May 2022 (against 2% growth in May 2021 and  5.3% growth in April 2022).

According to the preliminary data of the RA Statistical Committee,  the growth of economic activity in January-May 2022 was largely  conditioned by: the service sector - by 24.9%, the energy complex -  by 13.1% and the construction sector - by 11.4%, and to a lesser  extent the trade (8.9%) and the industrial sectors (2.7%). 

A year earlier, in January-May 2021, the growth drivers were the  construction sector - by 14.3% and the trade sector - by 7.4%, while  the industrial sector, the energy complex and the service sector  showed modest growth by 2.3%, 2% and 0,9%, respectively. 

The industrial products price index in January-May 2022 compared to  the same period in 2021 increased by 9.6%, in May 2022 compared to  May 2021 - by 5%, and in May 2022 alone decreased by 3.1%. A year  earlier, in similar periods, the following dynamics was recorded: the  price index of industrial products in January-May 2021 compared to  the same period in 2020 increased by 9%, in May 2021 by May 2020 - by  12.5%, and in May 2021 alone - by 1 %.

On a monthly terms,(for May 2022), the construction sector gave a  decisive impetus to the growth of economic activity with an increase  in volume by 21% (against an increase of 17.9% in May 2021), after  which by growth rates followed: trade - by 9.8% ( against a growth of  6% in May 2021), the service sector - by 6.3% (against a growth of  3.4% in May 2021), and the industrial sector - by 3.2% (against a  growth of 3.4% in May 2021 ). The energy complex lingered in the  decline, with a slight slowdown to 10.9% from 12.9% a year earlier.

On a y-o-y terms (May 2022 to May 2021), an increase in economic  activity was observed in all sectors, and even the energy complex  managed to get out of the 3.1% decline by 8.2% growth. Thus, the  service sector showed the highest growth, accelerating to 30.2% (from  17.3% a year earlier), after which, followed by the construction  sector, also with a significant increase in pace - from 0.5% to  18.1%. And the trade sector and the industrial sector, having  maintained their growth, slowed down from 17.6-7.9% to 12.4-2%.

According to the January-May 2022 statistics, the absolute leader is  the trade sector with a volume of 1.4 trillion drams ($ 2.98  billion). The second place is held by the industrial sector - 961.05  billion drams ($2.01 billion), the third place is occupied by the  service sector - 906.6 billion drams ($1.9 billion).  Agriculture  traditionally occupied the fourth place, but due to the lack of data,  this place was occupied by the construction sector- 112.04 billion  drams ($234.7 million). The volume of electricity generation in  January-May 2022 amounted to 3745.4 million kWh, of which 603 million  kWh in May alone.  

At the same time, Armenia's foreign trade turnover in January-May  2022 amounted to 1.9 trillion drams ($3.9 billion) with a y-o-y  increase of 36.6%. In its structure, the volume of exports increased  by 27.5% year-on-year to 658.5 billion drams ($1.4 billion), and  imports - by 42.2% to 1.2 trillion drams ($2.5 billion). In May 2022  alone, foreign trade turnover increased by 23.9% due to an increase  in exports by 19.9% with an increase in imports by 26.3%, and  compared to May 2021, an increase in foreign trade turnover by 45.5%  was largely provoked by an increase in imports by 52.8% and, to a  slightly lesser extent, an increase in exports by 33.7%. A year  earlier, in January-May 2021, foreign trade turnover increased by  11.6% per annum due to an increase in exports by 20.8% and imports by  6.7%, and the May growth of foreign trade turnover by 3.9% was  provoked by the upward dynamics of exports by 7.9% with an increase  in imports of only 1.5%, compared with May 2020, an increase in  foreign trade turnover by 35.3% was almost equally provoked by an  increase in exports and imports by 36.7% and 34.5%, respectively.  

The average settlement rate of the dram in May 2022 was 456.54  AMD/$1, and in January-May 2021 - 477.34 AMD/$1, against 521.35  AMD/$1 in May 2021 and 523.87 AMD/$1 in January- May 2021 the World  Bank revised its forecast for 2022 in early June this year, improving  Armenia's expected GDP growth rate from the previous 1.2% to the  updated 3.5%. The Central Bank of Armenia also revised its forecast  for 2022 in mid-June, indicating a more optimistic GDP growth of 4.9%  (against the previously forecasted 1.6%). The IMF has not yet revised  its forecast for 2022, dated March 17 this year, according to which  Armenia's GDP growth may slow down to 1.5%.  According to actual  statistics, Armenia's GDP in 2021 reached a 5.7% growth (from a 7.2%  decline in 2020), in pre-Covid 2019, growth of 7.6% was recorded. 

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