The European Bank for Reconstruction and Development (EBRD) has added its voice to forecasts that Armenia will fall into recession this year because of knock-on effects of Russia’s economic troubles.
In a report published on Thursday, the London-based multilateral institution financing business projects in former Communist states said the Armenian economy will contract by 1.5 percent.
The International Monetary Fund similarly forecast a 1 percent reduction in Armenia’s Gross Domestic Product in its World Economic Outlook released last month. It had earlier predicted a growth rate of 3.5 percent for the country.
The Armenian government publicly disagreed with the IMF projection, with Prime Minister Hovik Abrahamian saying that economic growth in the country will continue in 2015. Citing preliminary government estimates, Abrahamian said the domestic economy expanded by at least 2.5 percent in the first quarter of the year.
Hrant Bagratian, an opposition lawmaker who had served as prime minister from 1993-1996, described the IMF and EBRD forecasts as more realistic ones. “There will be growth or contraction within one percent range,” Bagratian told RFE/RL’s Armenian service (Azatutyun.am).
Echoing statements by IMF officials, Bagratian said the government should seek to offset the fallout from the Russian crisis with radical reforms that would improve Armenia’s business environment. “The government tries to dictate prices,” he claimed. “The economy is so centralized that they can do that.”
The EBRD president, Suma Chakrabarti, also called for such reforms after holding talks with Abrahamian and President Serzh Sarkisian in Yerevan on Monday. He said the authorities in Yerevan should boost competition and create a level playing field for all businesses. That, he said, “requires a lot of political courage and political leadership.”