2015年-世界发展银行全球_Armenia_Economic_Update_Spring_2015___Accelerating_Reforms_Increased_Uncertainty_22页_1mb

Armenia Economic Update Summary (Spring 2015)

Core Content

This report provides an overview of Armenia's macroeconomic, political, and structural developments in 2014 and early 2015. It highlights the challenges posed by external economic conditions, particularly the slowdown in Russia, and the need for structural reforms to ensure sustainable growth and protect vulnerable populations.

Main Views and Key Information

A. Recent Political Developments

• Armenia joined the Eurasian Economic Union (EEU) in January 2015.
• The political landscape saw increased tension between the ruling coalition and the Prosperous Armenia Party, which shifted from a neutral stance to joining the opposition.
• Constitutional reform was a key point of contention, with the party opposing the president's proposal to transform Armenia into a parliamentary republic.

B. Recent Economic Developments

• Economic Growth: Armenia's GDP growth slowed to 3.4% in 2014, compared to 3.5% in 2013.
• Demand Side: Net exports were the main contributor to growth, but private consumption and investment weakened.
• Sectoral Performance:
  • Services: Grew by 4.3%, contributing 2.2 percentage points to GDP.
  • Agriculture: Grew by 7.8% due to a favorable harvest, despite late frosts.
  • Manufacturing: Grew by 7.7%.
  • Construction, Mining, and Energy: Experienced significant contractions, with energy declining by 15.1%.
• Unemployment: Rose to 17.6% in 2014, up from 16.2% in 2013.
• Poverty: Stabilized at 30.2% in 2014, still above pre-crisis levels. Expected to rise slightly in 2015 and 2016 due to declining remittances and higher inflation.

C. Economic and Structural Policies

Fiscal and Debt Developments

• The fiscal deficit was 2.0% of GDP in 2014, below the budget target of 2.3%.
• Revenue: Tax revenues grew by 6.2%, with direct taxes accounting for 72.1% of the increase.
• Spending: Social transfers increased to 10.1% of GDP, while capital spending remained at 3%.
• Debt: External public debt decreased to US$3.9 billion (35.2% of GDP) in 2014.
• Eurobond Issue: A US$500 million Eurobond was issued in March 2015, with a 10-year maturity and 7.15% coupon rate. The issuance brought debt closer to the legal threshold of 50% of GDP.

Prices and Monetary Conditions

• The Armenian dram (AMD) depreciated by 17% in 2014 and stabilized at about 480 AMD per USD.
• Inflation rose to 5.4% in February 2015 (y-o-y), close to the Central Bank of Armenia (CBA) target range.
• Inflation Drivers:
  • Food prices increased by 7.0% (y-o-y).
  • Services prices rose by 1.2% due to higher electricity tariffs.
• Monetary Policy: The CBA raised the policy rate to a 13-year high of 10.5% in 2015 to combat inflation and stabilize the currency.

Balance of Payments Developments

• The current account deficit was 7.9% of GDP in 2014, a marginal improvement from 2013.
• Trade Deficit: Improved by 1.1% due to growth in jewelry exports.
• Remittances: Declined by 7.9% in 2014, with a significant drop in the second half of the year due to the Russian ruble's depreciation.
• FDI: Net inflows reached US$1.9 billion, 18.2% of GDP, with much of it coming from Russian investors in the energy sector.

Structural Reforms

• Structural reforms are aimed at increasing growth potential and protecting the poor and vulnerable.
• Key Reforms:
  • Aviation: Improved air connectivity through an open skies policy.
  • Customs: Streamlined procedures and improved institutional arrangements.
  • Business Environment: Reduced business inspections to limit rent-seeking and political interference.
  • Social Assistance: Efforts to improve efficiency and harmonize criteria for support programs.

D. Outlook

• Economic Growth: Expected to be barely positive in 2015, with a gradual recovery to 3.0% in 2017.
• Global Growth: Likely to remain sluggish due to an unfavorable external environment.
• Fiscal Challenges: The budget deficit is projected to remain around 2% of GDP in the medium term. Fiscal consolidation will remain a priority.
• Poverty Impact: Slower growth and employment, higher food prices, and declining remittances may lead to a slight increase in poverty, especially among the poor and vulnerable.
• Mitigation Needs: Active labor market policies and improved social assistance are necessary to offset the negative impacts of economic slowdown.

E. In Focus: Armenia's EEU Accession

• Armenia officially joined the EEU in January 2015, which may have long-term implications for its trade and economic policy.
• Trade Impact:
  • Accession Benefits: Customs-free access to a market of 170 million consumers.
  • Tariff Adjustments: Transition periods for adjusting tariffs to EEU levels (up to 2022) are expected to ease the impact of trade diversion.
  • Welfare Loss: A simulation suggested a welfare loss of 0.14% of GDP if current EEU tariffs were adopted immediately.
• Trade Composition:
  • Imports: More technologically advanced goods from the EU, more energy and basic goods from Russia.
  • Exports: Metals and minerals to the EU, higher-value-added goods to Russia.
• FDI Prospects: Armenia's more attractive investment climate may attract market-seeking FDI, especially if investors bring technology and know-how.

Conclusion

Armenia faces significant economic challenges in 2015 due to the slowdown in Russia and the depreciation of the ruble. The country is relying on structural reforms, sound fiscal management, and monetary policy to stabilize the economy and protect vulnerable groups. EEU accession offers both opportunities and risks, particularly in terms of trade diversification and the potential loss of access to EU markets. The government must continue to implement reforms and manage fiscal and monetary policies effectively to ensure sustainable growth and reduce poverty.