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The flip side of double-digit economic growth

26 / 08 / 2022

On August 26, the press conference of “Eurasian Expert Club” coordinator, political analyst Aram Safaryan, doctor of economic sciences, professors Tatul Manaseryan and Ashot Tavadyan was held in the press hall of “Armenpress” news agency, “Armenia’s economy in the first half of 2022 in the context of EAEU membership”.

During the press conference, the results of the regular 7th economic research of the club were presented. A. Safaryan reported that Armenia’s economy registered a 10.5% growth in the first half of 2022.And yet, parallel to this, poverty is also growing in Armenia and according to the forecasts of the World Bank, at the end of the year Armenia will have a double-digit poverty growth alongside the double-digit economic growth:the poverty rate may reach up to 48% at the end of the year instead of 27% at the beginning of the year.

T. Manaseryan considered it a paradox that along with the economic growth, poverty is also increasing in Armenia.In other words, the economic growth should, in fact, lead to an increase in the income of the population through an increase in jobs, an increase in purchasing power and a reduction in poverty. However, we see the exact opposite picture.

According to him, if there is a double-digit economic growth in the country, which was ensured as a result of the government’s activities, then this should also be reflected in the incomes of the population. If the economic growth in Armenia was natural, it would certainly lead to the improvement of the social condition of the citizens and the reduction of poverty. And if this does not happen, then the mentioned increase is only the result of statistical “drawing”.

According to Manaseryan, the impetus for Armenia’s economic growth was mainly the flow of temporary migrants from Russia, as a result of which the demand for essential goods and various services increased, leading to an increase in trade turnover in general. However, according to the expert, it is “economic doping” and Armenia will have a lot to worry about when its effects end, that is, when the Russian-Ukrainian ceasefire ends.

If poverty is close to 48 percent, and in Shirak marz, this indicator has already exceeded 50 percent, it means that every second citizen of RA is already poor today.

According to A. Tavadyan, the first problem facing Armenia’s economy is the very sharp imbalance of the trade balance, the second is unemployment, and the third is migration. He stressed that the economic growth-poverty paradox indicates that our economy is sick and has serious problems.

Back in April, RA de-facto economy minister Vahan Kerobyan announced that the poverty level in Armenia is growing at a huge rate. And on July 7, during a briefing with journalists, he said that the government should redistribute the results of high economic growth in such a way as to reduce poverty, and now we are facing the risk of increasing poverty due to high food prices. According to Kerobyan, the de-facto Government intends to overcome poverty through the creation of new jobs and work:in particular, the minimum wages and pensions will increase from next year.

Let’s remind that according to the statistics published on the website of the UN World Food Program, the number of malnourished people in Armenia has increased by 90,000 in the last 3 months. Moreover, the total number of malnourished people in Armenia is half a million people.

At present, RA is in such an economic situation, where along with high economic growth, there is also high inflation. The latter leads to a violation of the foreign trade balance, and the level of employment remains on top of the agenda. According to the latest data published by the methodology of the International Labor Organization, in 2021 In the first quarter, the unemployment rate in Armenia is 17%. this is the highest index among EAEU countries.

Meanwhile, the ruling de-facto regime trumpeted the upcoming economic reforms in its pre-election program before the parliamentary elections, mentioning the elimination of unemployment and poverty. However, the power that came to power with cries of 30% poverty only deepened the crisis and worsened the social condition of the population.

Let’s also add that on June 16, “Armenian Wave” prepared an infographic and an explanation about the necessary consumer goods that experienced inflation in Armenia in the last year.

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