Is Armenia’s Economic Crisis Really Over?

I just read an interesting report on RFE/RL about what is being pawned off as the end of an “economic crisis” in Armenia. I guess that depends on who you ask and where in Armenia you live.

Below are excerpts from the article:

Armenia’s worst recession since the early 1990s has come to an end, a senior government official claimed on Monday, citing official statistics that show the Armenian economy growing last month for the first time in over a year.

According to preliminary data released by the National Statistical Service (NSS), Gross Domestic Product (GDP) increased by 2.4 percent year on year in January after shrinking by 14.4 percent in 2009.

The reported growth was twice faster than the one forecast by the Armenian government for 2010. A senior official from the International Monetary Fund (IMF) said last week that the full-year growth rate may well reach 2 percent.

The NSS data show that a 6.5 percent rise in industrial output was the main driving force behind the unfolding recovery. That seems to have primarily resulted from rallying international prices of copper and other non-ferrous metals, Armenia’s main export item. Armenian exports jumped by 57.5 percent to almost $54 million in January.

Armenia’s macroeconomic performance was also positively affected by a 3 percent growth in agriculture reported by the NSS. By contrast, the construction sector, which has born the brunt of the recession, contracted by about 11 percent during the same period.

Trade and Economic Development Minister Nerses Yeritsian portrayed the latest macroeconomic data as a clear indication that the economic crisis in the country is over. “And I want to assure you that we have come of out that crisis well,” he told journalists.

In Yeritsian words, the recovery is facilitated by what he described as substantial capital investments that have been made in public infrastructures in the last two years. “They could not have failed to have an impact on the diversification of the economy and this growth figure,” he said.

Yeritsian also insisted that financial assistance provided by the government to the crisis-hit construction industry has not been a waste of money. “The government measures against the construction decline have been limited,” he said. “The government has never even tried to fully make up for the construction decline.”

Finance Minister Tigran Davtian likewise asserted in late December that Armenia is emerging from the recession with minimal losses. Davtian downplayed the sharp GDP drop which has increased unemployment and poverty in the country.

According to World Bank estimates, the number of Armenians living below the official poverty line rose by 90,000 to make up 28.4 percent of the population in the first half of 2009.

If you ask me, Armenia did not go through a temporary crisis that lasted for about a year and only recently rebounded. Maybe Yerevan perhaps (I don’t believe this) but not the entire country. On the contrary, the economic situation of Armenia has been in crisis mode since it declared independence in 1991.

And it’s really surreal to keep reading that construction was in a decline in 2009 while high-rise apartment buildings are being erected across Arabkir and in central Yerevan. Sure, the construction of certain buildings is slow-going. Some of them have been going up for as long as five years, with construction ceasing for several months then starting again until the developer’s cash runs out. What has that to do with the “crisis?”

Do I need to mention all the new shiny supermarkets, exclusive boutiques and expensive restaurants that have been popping up everywhere in central Yerevan?

Let’s see how Laura Tadevosyan is coping with things in Aragatsotn at the end of the “economic crisis,” as reported by Hetq:

When [w]e visited the abandoned hut, Laura came out to greet us. The elderly woman was covered in soot and her cheeks were swollen from the cold. The clothes she wore were old and tattered. She spoke in a straightforward and lucid manner with us and said that the family had always encountered hardships and that they had now adjusted to their new situation.

The family owned a one room apartment in the town of Kapan, Syunik Marz. They used the money to rent and lived in different places until they wound up here, at the garbage dump.

“My son-in-law is from Masis and he wanted us close by. We sold the apartment and came to Yerevan with the hope of buying a place here to live. He got arrested for a robbery. We moved around for a while and then found ourselves here. We first lived in Ashtarak, but an acquaintance brought us here,” said Mrs.Tadevosyan. “When money falls into your hands, you get flustered and don’t know how to spend it all. It was my daughter and her husband that managed the house money. We spent it all and wound up on the street.”

She and the kids live in a metal “tnak” (hut) that is falling apart and the roof is missing in spots. When we stepped inside, the place was engulfed in smoke. Soot and grime was everywhere. Even the bed sheets were blackened by the soot. They had been burning garbage from the dump, plastic bottles, pieces of wood and shoes, to stay warm.

The hut consists of two small rooms with two metal beds and a few chairs.

“We live in a pretty awful state. I’m ashamed to even show you how we live,” Laura said. For the past two years the family has used candle to light the house.

Mrs. Tadevosyan said they have no relatives in Armenia. They’ve all moved to Russia. Her son also lives in Russia and she says he sends money when he can.

Washing glass bottles is their only source of income. Laura said that there’s a soda plant in Ashtarak. They get the bottles from the plant and wash them for 2 drams a bottle. Workers from the plant then come and collect the bottles.

“I don’t wind up washing many bottles when it’s cold like this. At best, I can wash 1,500 a day. When the kids are home they help me out and I can wash more. The girl is just a child but she’s in water the whole day washing bottles for money. What else can I do?” Laura asks.


2 thoughts on “Is Armenia’s Economic Crisis Really Over?

  1. I’m sure the unfortunate woman mentioned in the Hetq piece never even heard of the “crisis”. So, whether it’s over or not (and many western experts say it isn’t), will not make a whole lot of difference in her life or the prospects of her grandkids.

    She has been given promises of official assistance, but let’s not hold our breath.

    And the government wants to spend BILLIONS to build casinos in Jermuk…VAY,AMOT!

  2. With the rise in gas prices come April 1, this poor family can perhaps take some solace in the fact that others will see a drop in their standard of living as well. Not the oligarchs of course.

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