Interest of foreign investors in Armenia is on decline
Since early September a new wave of devaluation of Armenian dram was registered. At the Armenian stock exchange $1 costs 412 drams, while a week ago $1 costed about 408 drams. Thus, devaluation was 11% in few days. At the moment dollar demand increases, and it leads to devaluation of dram.
Early September was marked by the growth of flour prices. Previously 50-kilo bag of flour costed 11 500 drams; now it costs 12 thousand drams. Bread became more expensive as well. If prices remain the same, it means bread’s weight reduces.
The member of the Council of Republican Party of Armenia (RPA), the head of the constant parliamentary committee on fiscal issues, Gagik Minasian, is sure that economic indexes of the first half of the year are positive in Armenia which enables prediction of stability of basic macroeconomic indexes and absence of problems with implementation of the state budget. According to him, the analysis is based on data published by the statistics service. They say that the index of economic activity was 7.7% in January-July; the economic growth is registered in all spheres except for construction. The results of the first half of 2012 confirm over-fulfillment of budget inflows, while the price growth remains within predicted limits in the end of the year.
At the same time, such predictions and optimistic attitudes do not influence the social situation. Population’s income hasn’t grown in the period. The wage level in Armenia is meaningful in this context. Armenia has the slowest pace of wages’ growth among the CIS countries – 1% only.
This index doesn’t correlate with official information of the 13-per cent economic growth in industry which is the biggest among the CIS countries. Industry is the major segment of Armenian economy. The official statistics data states that in the first half cost of the produced goods was 501 billion drams. The agricultural volumes were 203 billion drams; the construction volumes – 130 billion drams. The 13-per cent boom in the biggest sphere of economy couldn’t but lead to increase of living standards – increase of wages and purchasing power. However, wages grew only by 1%. In the context of prices increasing and wages staying the same, purchasing power of population couldn’t grow.
About 325 thousand citizens appeared between beggary and poverty. These people have income in 6530 drams ($17.5) per person in a month. Another relatively “successful” group of citizens has income in 12242 drams ($30) in a month.
The hardest social situation and odd indexes which are far from normal economic logics are not new. However, a special attention should be paid to decrease of foreign investments to Armenian economy by 40%.
The volume of foreign investments into Armenian economy in the first half of 2012 was $266 million. This index is the lowest in recent 6 years. Russian investments into Armenian economy reduced by 80%; French investments – by 65%; the American investments – by 78%; the UK investments – by 81%. These countries are main investors to the Armenian economy. The dynamics show that Armenian economy lacks attraction for foreign investors. It is another reason for thinking over the current socio-economic situation in the country.