IMF Expects Positive Economic Performance in Armenia for 2015

The International Monetary Fund believes the bulk of Armenia’s 2015 economic growth will come from the agriculture sector, according to The Times of India. Over 40 percent of the nation’s employees work in agriculture.

The International Monetary Fund believes the bulk of Armenia’s 2015 economic growth will come from the agriculture sector, according to The Times of India. Over 40 percent of the nation’s employees work in agriculture.

Agriculture is vital to Armenia, but it will not be enough to get the West Asian country out of its current predicament. The IMF further stated that officials would need to address such areas as structural reform and the tax system before Armenia will see any type of sustained recovery, and these reforms need to commence sooner rather than later to appease an increasingly dissatisfied public.

Protesters have demonstrated in the past few weeks, stemming from a 16.7 percent power increase hike around the nation, but President Serzh Sargsyan decided to suspend the hike. Many protesters cited vast corruption within the energy sector as a primary issue. The power supplier behind the increase is Electric Networks of Armenia, but it is owned by Russian state-owned firm Inter RAO United Energy Systems. In addition, Russians own a great deal of other sectors of the economy, and local and Russian monopolies are entrenched in Armenia. Many Armenians have become frustrated with Russia, and some had hoped the government would forge economic ties with the European Union, but the president steered Armenia in the direction of Russia’s Customs Union. Some Armenians believe trade relationships with the West would increase their standard of living.

Russia and Armenia share close political and economic ties, and Armenia is heavily dependent Russian gas and investment to fuel the economy. Armenia’s economy is suffering largely because of lower Russian demand that hurts exports, and remittances have been in decline. In May, the government revised the country’s growth estimate to around 2.0 percent for the year instead of 4.0 percent, which was partly in response to Russia’s economic downturn. Over 1.5 million Armenians live and work in Russia.

Some analysts have attempted to depict the protests as an uprising against Russia, but many protesters rejected the notion of an anti-Russian uprising, and much of the anger has more to do with Armenia’s economic history. Armenia is one of the poorest nations in the world, and 36 percent of Armenians live below the poverty line. The average Armenian makes $600 a month, and individual income averages $7,400 a year. The unemployment rate has persisted at 15 percent for decades, and the government has encouraged workers to travel abroad to work as an economic solution. The government has used other countries as a crutch to enhance the economy, but until officials cleanse the government of corruption and change its monopolistic structure, Armenia’s problems will continue regardless of Russian or Western influence.