On October 15, the “Economy Today” conference was held. “Numbers and results” press conference. During the press conference, the periodical “Numbers and Results” dedicated to the activities of the center was also presented.
In his speech, Ishkhan Karapetyan, the President of the National Democratic Party of Ukraine, mentioned that in 2019 in the first half of the year, the economic activity index was 6.5%, which at first glance can be evaluated positively, but what is important is the trend of the index, which is very dangerous, if we compare it with the economic activity index of the first half of 2018/2017, which was 8.9%, we we immediately see that the growth rate has slowed down by 2.4 percentage points.
A slowdown in growth rates was also recorded in other sectors of the economy.
Ishkhan Karapetyan also emphasized that in the first half of 2019, compared to the same period of 2018, the tax revenues of the state budget increased by about 141 billion AMD or 24.5%, adding that the National Tax Agency analyzed the tax buoyancy index, which showed gives how much a 1% increase in real GDP increases real tax revenues. With the recorded increase in tax revenues, the real GDP growth rate (other things being equal) should be 30-40%, while in the first half of 2019, the real GDP growth rate was 6.5%, creating a paradoxical situation.
Speaking about the current account deficit/GDP ratio, Ishkhan Karapetyan noted.
“Current account deficit/GDP ratio was 9.1% in 2018, and 9.1% in 2019. in the first semester: 9.7%. I would like to note that in 2015-2017, the latter did not exceed 2.6%. According to the analytical data of the Central Bank of the Republic of Armenia, 9% is considered a dangerous threshold from the point of view of the occurrence of currency and economic crises in the Republic of Armenia. In the first half of 2019, it was 9.7%. I leave the assessment to you.”
In response to the journalist’s question, how will we assess the current state of the economy, Ishkhan Karapetyan answered.
“Not comparable to the economic revolution.”
Speaking about the spending directions of the budget, the director of the National Committee of the National People’s Congress, Marine Arakelyan, noted that in terms of state budget expenditures, we have a 20% shortfall, or 161 billion AMD in absolute terms. More worryingly, the underperformance in terms of capital expenditure reaches 76% or 75 billion drams. It is obvious that capital expenditures are one of the important prerequisites for economic activity, and if such a trend continues, then the pace of economic activity will slow down significantly, at least in the short term.
Answering the journalist’s question about foreign investments, Arakelyan said.
“Foreign direct investments decreased by around 16% in the first half of 2019. Among other factors, a stable and predictable legal and economic environment is very important for investors. I would also like to emphasize that reinvestment is an important component of FDI. This means that companies with foreign capital operating in RA want to reinvest their incomes in the RA economy, and if we look at the data of the first half of 2019, we have a problem here as well. reinvestment decreased by about 77%.”