The recent dramatic change of Armenia’s government has had a positive impact on the macroeconomic situation in the country, Prime Minister Nikol Pashinian insisted on Thursday.
“The revolution, the political changes have not only not led to an economic decline, which is what usually happens in such cases, but have on the contrary led to a certain degree of economic activity,” he said at a weekly cabinet meeting in Yerevan.
According to the state Statistical Committee (SC), the Armenian economy grew by 7.5 percent last year after stagnating in 2016. Economic growth accelerated to 9.6 percent in the first quarter of this year shortly before mass protests organized by Pashinian forced Armenia’s longtime leader, Serzh Sarkisian, to step down.
The protests involved nationwide blockages of streets and roads that brought much of the country to a standstill. They continued until the beginning of May.
The Statistical Committee has yet to release GDP growth data for the first half of this year. It has only reported separate figures on foreign trade and various sectors of the economy which suggest that growth slowed in the second quarter.
In particular, first-half industrial output and retail and wholesale sales were up by 3.7 percent and 9 percent respectively, compared with 8.2 percent and 13 percent in the first quarter. The construction sector expanded by 13.5 percent year on year in January-June, down from 23 percent in the first-quarter.
Also, the government agency recorded a 34 percent surge in Armenia’s first-quarter exports. Growth in exports stood at 20 percent in the six-month period.
Pashinian seized upon another official figure, the “indicator of economic activity,” which rose by almost 9 percent in the first half. “This indicator is especially important since it is widely thought that after such political changes economic activity usually declines sharply,” he said.
The economic activity figure, which is different from GDP growth, was up by 10.6 percent in January-March.
Armenia - Prime Minister Nikol Pashinian holds a news conference in Yerevan, 20 July 2018.
The premier also insisted on Thursday that his government is “very interested” in attracting badly needed investments in the Armenian economy and is radically improving the domestic business environment for that purpose.But he cautioned that that they must be “legal investments that have no traces of illegal activity.”
Vahagn Khachatrian, an independent economist, believes that Pashinian’s government has already made major progress in creating a level playing field for businesses and breaking up de facto economic monopolies that thrived under the previous governments.
“But there is one issue here which I believe will be solved over time,” Khachatrian told RFE/RL’s Armenian service (Azatutyun.am). “The former corrupt schemes do not work anymore, but neither do the new, lawful schemes yet.”
In that regard, Pashinian dismissed critics’ claims that his government’s economic policies, notably a tighter scrutiny of business projects, are scaring away potential and actual investors. “I think that on the contrary with such discussions we are sending a very positive message to the economy to the effect that our objective is to make all these legal mechanisms function in an honest and fair way,” he said.
The premier acknowledged at the same time a lack of “atmosphere of cooperation and dialogue between business and the government” in Armenia. “We have to admit that so far we have not created and activated full-fledged channels of such dialogue,” he told his ministers. “But this is an objective which we must definitely achieve.”
Many of Armenia’s wealthy entrepreneurs were linked to the former government in one way or another. Some of them have been accused of tax evasion and forced to pay heavy fines in the last two months.