Due to the influence of external factors caused by the Russian-Ukrainian conflict, the short-term nature of the high economic growth of RA recorded in the previous two years is already a reality.
In particular, economic activity has been steadily decreasing since the second quarter of this year. 2022 in the first nine months, compared to the same period last year, the GDP growth was 12.3 percent, and in 2023 the comparable indicator decreased by 2.8 percentage points and made 9.5 percent. The next one is in 2022. In October, the growth of the RA economic activity index, compared to the same month last year, was 17.5 percent, which subsequently had a three-fold decrease in 2023. making 6 percent in October.
Moreover, even in conditions of close to two-digit GDP growth, in 2023 as of October, the RA state debt became 11 billion 116 million US dollars, increasing by 10.5 percent compared to the same period last year. 2022 in October as well, compared to the same period last year, the state debt increased by about 10 percent, crossing the threshold of 10 billion US dollars.
Now, about the growth of general demand caused by external, random factors and the negative trends in the GDP structure.
Compared to the previous year, in 2022 a 12.64 percent increase in GDP was recorded. 2022 The 12.64 percent GDP growth had the following sectoral effects:
– agriculture, which had a negative impact of -0.07 percentage points,
– industry is insignificant, +1.28 percentage points,
– construction is insignificant, +1.23 percentage points,
– trade and services are significant with +9.34 percentage points.
Compared to the 1st quarter of the previous year, in 2023 In the 1st quarter, a 12.05 percent increase in GDP was recorded, which steadily decreased to 7.38 percent in the 3rd quarter of this year.
2023 The 7.38 percent GDP growth in the 3rd quarter was influenced by the following sectors:
– agriculture with only +0.23 percentage points,
– industry had a negative impact of -0.43 percentage points,
– construction by +1.23 percentage points,
– trade and services are significant with +6.34 percentage points.
In fact, in 2022 the trade and service sectors, due to the progressive increase in demand, had the lion’s share. 74 percent of the total GDP growth was provided by these sectors. This trend continued this year as well. 2023 in the third quarter, the share of influence of the trade and services sector in GDP growth increased by 12 percentage points and made 86 percent.
2023 The following GDP structure was recorded in the 3rd quarter and in 2022. compared to negative trends
– agriculture: 11.7 percent, which in 2022 It decreased by 2.1 percentage points compared to the 3rd quarter.
– industry: 15.1 percent, which in 2022 It decreased by 2.3 percentage points compared to the 3rd quarter.
– construction: 7.2 percent, which in 2022 almost unchanged compared to the 3rd quarter,
– trade and services: 58 percent, which in 2022 Compared to the 3rd quarter, it increased by 4.8 percentage points.
In fact, in 2023 Also, the share of trade and services in the structure of GDP showed a progressive growth trend, while the share of the real sector (agriculture, industry) showed a decreasing trend.
Compared to the same period of the previous year, in 2023 In the 3rd quarter, GDP growth was recorded in the agriculture sector (after significant declines during 2022 and in the 1st half of 2023), only the mining sector of the industry sector, and the manufacturing industry had zero growth. They continued to have significantly higher than average and progressive growth:
– construction: 32.2 percent, which in 2022 the comparable indicator exceeds by 12.3 percentage points,
– trade sector: 36 percent, which in 2022 the comparable indicator exceeds by 16 percentage points,
– hotel and public catering services – 37.5 percent, which in 2022 the comparable indicator exceeds by 24.7 percentage points,
– entertainment and leisure organization services: 32.1 percent, which in 2022 the comparable indicator exceeds by 24.3 percentage points,
– other maintenance services – 27.2 percent, which in 2022 it exceeds the comparable indicator by 4 percentage points.
In fact, in the 3rd quarter of this year as well, the high GDP growth trends recorded by economic sectors are mainly due to the increase in demand in the trade and services sectors, which, as I have already mentioned, is the result of the influence of external, random factors.
Although in 2023 In the first quarter, the information and communication services sector registered an impressive growth of 50 percent, but in 2022. is inferior to the comparable index by almost 10 percentage points. From the point of view of high-tech development, a significant reduction in growth rates is observed in this primary sector.
It is also noteworthy that in 2022 After a reported 47 percent jump in growth, in 2023 financial services are already recording double-digit declines of around 10 percent each quarter. And this is significantly due to the growth rates of foreign trade turnover, as well as the significant decrease in funds received from abroad (the flight of foreign funds).
In particular, in 2023 In January-October, the difference in the amount of funds received from abroad and transferred abroad in the name of individuals through RA banks (net inflow) amounted to 568 billion drams, which decreased by around 313 billion drams or 36%. compared to the corresponding period.
Next, in 2022 In January-October, RA’s foreign trade turnover (the sum of total export and import) increased by 66.4 percent compared to the same period of the previous year, and in 2023 the comparable indicator was only 41.2 percent, decreasing by 1.6 times.
Summarizing: The high economic growth recorded last year and still continuing this year is mainly the result of a rapid increase in overall economic demand, which is caused by external, random and short-term factors. Moreover, these factors are increasingly weakening, leading to a steady decrease in economic growth rates and causing new risks to ensure economic growth.
Moreover, the recorded high economic growth was never capitalized, it did not lead to the improvement of the economic structure of RA and the increase of the supply potential. On the contrary, the negative tendencies of the macro-indicators of the real sector of the economy are deepening. In addition to all this, the immeasurable risks of economic security against the backdrop of increasing external geopolitical threats…
Tadevos Avetisyan
Member of the RA NA “Armenia” faction
Member of the Supreme Body of the ARF of Armenia