2014年-世界发展银行全球_Armenia___A_Cloudy_Outlook_32页_1mb

Summary of Armenia: A Cloudy Outlook

Core Content

This report provides an analysis of Armenia's economic situation in the fall of 2014, highlighting the challenges and prospects for growth, inflation, external accounts, employment, and poverty reduction. It also discusses recent political developments and structural policy changes.

Main Points

Economic Growth and Domestic Demand

• Economic Growth: Economic growth slowed to 3.5 percent in 2013 and 2.7 percent year-on-year in the first half of 2014.
• Growth Drivers: The non-tradable services sector was the main contributor to growth, while the tradable sector (industry and agriculture) contributed less.
• Construction Sector: Continued decline due to weak private demand and under-execution of government capital spending.
• FDI and Exports: Foreign direct investment (FDI) inflows were subdued, and exports to the Eurasian Economic Union (EEU) did not increase significantly despite the expected accession.
• Import Trends: Imports grew slightly, mainly due to increased net imports of diamonds, passenger cars, and metallic products.

Inflation

• Inflation Trends: Inflation declined significantly after the 2013 summer surge, reaching 0.8 percent in August 2014, well below the CBA's target range of 2.5-5.5 percent.
• Core Inflation: Core inflation, excluding food and fuel, remained below headline inflation, indicating minimal second-round effects.
• Sectoral Inflation: Prices for non-food products and services were stable, while food prices declined, easing inflationary pressure on the poor.

External Accounts

• Current Account Deficit (CAD): The CAD widened to 14.6 percent of GDP in the first half of 2014, driven by unfavorable trade balance developments and lower remittances.
• Export Diversification: Exports became more diversified, but overall export concentration and diversification indexes declined.
• EU Influence: Expected accession to the EEU may not significantly boost exports, as the EU is expected to stimulate demand more than the EEU.

Employment and Labor Market

• Unemployment: Unemployment reached 17.8 percent in March 2014, up from 16.2 percent in 2013.
• Gender Disparities: A significant portion of job-seekers were women, and gender disparities in the labor market persisted.
• Wage Gap: Private sector wages were 37 percent higher than public sector wages in the first quarter of 2014, with public wages rising due to year-end bonuses.

Poverty and Shared Prosperity

• Poverty Incidence: Poverty incidence has been recovering slowly since the 2009 crisis, with 32.4 percent of Armenians living in poverty in 2012.
• Consumption Basket: Poorer groups were less affected by price increases than the overall CPI basket, contributing to slower poverty growth.
• Shared Prosperity: Average consumption of the poorest 40 percent grew at 1.44 percent annually, slightly below the overall population growth rate.
• Poverty Reduction: Poverty reduction was more responsive to general economic growth than to agricultural growth, with an elasticity of -0.8.

Key Policies

Fiscal Policy

• Fiscal Surplus: The fiscal surplus in the first half of 2014 was 1.3 percent of GDP, against an initial deficit estimate of 3.1 percent.
• Tax Administration: Tax administration focused on reducing accumulated tax credits, which had an expansionary effect on domestic demand.
• Budget Execution: Under-execution of capital expenditures and adherence to nominal tax revenue targets contributed to the fiscal surplus.
• Fiscal Support: The government needed additional budget support, which was partially addressed through increased allocation for DPO-2.

Monetary and Exchange Rate Policies

• Policy Rate Reduction: The CBA reduced the policy rate by 175 basis points since September 2013, in response to moderated inflationary pressures.
• Monetary Stance: The reduction in the policy rate helped to ease inflationary pressures and support economic activity.

Structural Reforms

• Pension Reform: The controversial pension reform was amended, allowing private sector workers to opt out until July 2017, with public employees required to participate.
• Constitutional Reforms: Armenia is heading into another round of constitutional reforms, aiming to reduce the president's powers and increase the role of the government and parliament.

Outlook and Risks

External Economic Environment

• Trade Profile: The anticipated shift to the EEU may not significantly boost exports, as the EU is expected to stimulate demand more effectively.
• Russia's Impact: Slower growth in Russia and geopolitical tensions negatively impacted FDI inflows and remittances.
• Export Trends: Exports to the EEU and EU declined, while exports to China increased, indicating a shift in trade patterns.

Armenia's Outlook

• Growth Prospects: Economic growth for 2014 is expected to be around 3 percent, with continued challenges from the external environment.
• Fiscal Risks: Low growth is a major macroeconomic risk, particularly for fiscal accounts.
• Potential Impact: If the tax-to-GDP ratio is raised in line with nominal collection targets, it could further constrain growth, but would avoid a budget shortfall.

Risks

• Economic Slowdown: Continued slow economic growth is a significant risk.
• FDI Decline: FDI inflows are expected to remain low due to the economic slowdown in Russia and geopolitical tensions.
• Exchange Rate Pressures: The CBA has taken measures to mitigate depreciation pressures through open market operations.
• Political Uncertainty: Political developments and regional tensions continue to affect the economic environment.

Special Topic: Anticipated Trade Impact of Joining the Eurasian Customs Union

• Trade Profile: The expected accession to the EEU has not yet significantly impacted Armenia's trade profile.
• EU Demand: The EU is expected to stimulate export demand more effectively than the EEU.
• CIS Impact: Impulses from developing CIS countries are likely to be negative due to trade partner slowdowns and falling commodity prices.

Appendix

• Fiscal Indicators: Table 1 provides fiscal indicators for 2012-14, including tax revenues and public debt.
• Trade Data: Table 2 outlines the shares of products by import tariff category in Armenia and the ECU for 2011-12.

Conclusion

The report outlines a challenging economic outlook for Armenia in 2014, marked by slow growth, a widening current account deficit, and continued labor market issues. Political developments and regional tensions further complicate the economic environment, while structural reforms and fiscal policies aim to address these challenges. The anticipated accession to the EEU may not significantly boost exports, as the EU is expected to drive demand more effectively than the EEU. Overall, the report emphasizes the need for continued fiscal and structural reforms to support sustainable growth and reduce poverty.