Friday, August 26 2022 14:41

ArmInfo.One of the most important problems facing the Armenian economy is a serious violation of the trade balance and structural imbalance of the economy.

On August 26, at a press conference in Yerevan, presenting the seventh  economic study of the Eurasian Expert Club, Ashot Tavadyan, Doctor of  Economics, Professor, Head of the Economic Research Center, member of  the Eurasian Club of Experts, expressed the opportunities and   challenges in Eurasian integration.  The expert stated that the  problem of unemployment and the migration caused by it is acute.

"First of all, economic relations with Russia provide real  opportunities for solving these problems, which is directly  facilitated by cheaper energy resources and real demand for Armenia's  products. The widest opportunities in terms of prices for energy  resources, as well as for strategic products of Armenia, are provided  primarily by the leader of the EAEU - Russian Federation," Tavadyan  noted, drawing attention to the fact that the EAEU has created  additional opportunities for obtaining preferential loans, and, first  of all, to strengthen the defense capability of the Republic of  Armenia.

According to him, in contrast to a number of loans from international  organizations, strictly targeted loans were received from Russia. He  recalled that two preferential loans of $300 million are directly  aimed at strengthening the defense capability of our country. At the  same time, of course, the efficiency of using such loans is of key  importance and the Armenian government  is the one that should  perform this function.

"Armenia has also received from Russia a target loan of $270 million  and $30 million as a grant, necessary for the modernization and life  extension of the Armenian NPP.

Two aspects of the measures - the abolition of customs duties and the  reduction in prices for imported raw materials - certainly contribute  to the growth of exports and the reduction of unemployment. Compared  to world prices, significantly lower energy prices have a positive  effect on increasing the competitiveness of local products. At the  same time, there are still certain restrictions between our  countries. Within the framework of EAEU, it is very important to  further significantly reduce the restrictions. For that, it is also  necessary to conduct a coordinated fiscal and monetary policy," the  expert believes.

At the same time, Tavayan is convinced that the main task of economic  security is to ensure stable economic growth and a significant  increase in exports, which is especially important for countries with  small economies.

"The formation of a unified regional economy involves not only the  formation of unified management bodies and coordination of the  actions of the countries participating in the Eurasian economic  integration, but also the transfer of all national economies to  fundamentally new tracks - their reorientation to indicators of  aggregate GDP, to a coordinated macroeconomic policy, to the growth  of exports, to a significant increase in the level of employment,"  the professor believes.

In this vein, he added that especially in the context of the  sanctions against the Russia, the decision of the Supreme Eurasian  Economic Council on the establishment of the EAEU Industrial Policy  Council, the purpose of which is to harmonize the industrial policy  of the EAEU countries and prepare proposals on strategies, directions  and prospects for the development of the industrial complex of the  EAEU, is important. 

"To harmonize the policies of the EAEU countries, the agreement of  the countries of the Eurasian Economic Union on the establishment of  a commission on import substitution and industrial cooperation is  very important. It is assumed that the new body of the Union will  select the most promising integration projects in the integration  sectors. The Armenian government should take the initiative and use  new opportunities for growth in exports of finished products and  cooperation with Russia, primarily in the military-industrial field,"  Tavadyan said.

In turn, Candidate of Economics, Associate Professor, Head of ASUE  Economic Uncertainty Modeling Laboratory, member of the Eurasian  Expert Club Aghasi Tavadyan stated that the Russian market is  traditionally the key market for Armenia.

According to him, relations with Russia have a high potential to  ensure the country's security, contribute to the growth of exports of  finished products, and increase the level of employment.

"A limitation that prevents the free movement of labor in the  internal market of the EAEU is the absence or insufficient legal  regulation of pensions in the implementation of labor activities in  other member states. A constraining factor in the formation of a  common labor market is also the use of different pension systems in  the member states. The main difference lies in the different  approaches to the financing of the pension system and the  distribution of pension funds.

In addition, pension systems differ structurally: in terms of  retirement age, size, sources of pension contributions, and other  parameters. It should be noted that the main purpose of the Treaty in  terms of social and pension security is to form a mechanism that  provides workers with the opportunity to fully realize the pension  rights earned on the territory of the EAEU member states, regardless  of which of these states they will live in the retirement period ",  said the expert.

According to him, Armenia needs to formulate those critical tasks,  without which it will be difficult to fully realize the potential of  the integration agreement with the EAEU. Aghasi Tavadyan believes  that the income level is the most important initial position in the  integration process of the population relative to the countries that  make up the integration group.

"Armenia ranks 4th in terms of per capita income. A key factor in the  economic growth of the Republic of Armenia is the export of high  value-added products. An important characteristic of the Armenian  labor market is the high level of real unemployment, which remains at  double digits. Approximately one out of every five economically  active people is unemployed. This has also led to high labor  migration.

An active migration strategy of the state in this direction is  needed. A significant share of private consumption is accounted for  by imported goods, including food. Remittances stimulate the consumer  market, construction and service production. The state policy of  exporting labor resources should regulate labor migration," the  expert believes.

At the same time, according to him, in order to protect and support  labor migrants, it is important to use the opportunities provided by  agreements within the Union, and to negotiate the expansion of  existing agreements in the direction of providing full-fledged social  insurance, mutual recognition of educational diplomas, and the  possibility of obtaining professional education on territory of the  host country.

"The next challenge, which is a consequence of high labor migration,  can be considered the situation with the country's trade balance.  This situation can lead to significant pressure on the exchange rate  and problems in the external sector related to financing the current  account, since labor incomes of migrants directly depend on the  migration policy of the host countries and the degree of legalization  of migrants, while the receipt of grants and investments is very  sensitive to the economic situation of donor countries.  The  imbalance of foreign trade is covered by remittances of labor  migrants (70%) and external grants and investments (30%).  

The development strategy of the Armenian economy should be based on  the development of export potential in the few available growth  points.  Armenia's access to foreign markets is hampered by  infrastructural and personnel obstacles, to overcome which it is  necessary to use all possible means of regulating foreign trade and  all the possibilities of the EAEU to integrate into the world  economy, allowing Armenian producers to achieve economies of scale,"  Aghasi Tavadyan summed up.