YEREVAN, March 23, /ARKA/. ARKA information agency unveils  the findings of a survey it conducted among local independent experts, journalists writing on economic issues  and prominent members of the banking community  to find out what they thought about  the dynamics and growth trends of major economic indicators. The findings are presented  in  short-and  long-term perspective.

The main goal  was to reveal the most objective assessment of the economic situation in the country  and also  help  shape a culture of forecasting  and analyzing  which is  instrumental in creating an influential  community of experts. Although they say that  making forecasts is a thankless task, and that forecasts very often diverge from real facts, the existence of an established community of experts may help real sector players in planning and implementing  their current and  future economic activity.

Will the Armenian Economy Grow?

The most important forecasts now are the ones about GDP growth rates and its dynamics.  Major international financial organizations which have their representations in Armenia, namely the World Bank and the International Monetary Fund (IMF),  have projected a 2% GDP growth for 2010. The government believes it may grow up to  1.8%. The majority of experts polled by ARKA appeared to be even more optimistic  than the World Bank or IMF, predicting a GDP growth up to 4.5%

Forecasts by representatives of banks  were close to the government’s projection. People from Armbusinessbank and Armeconombank  said the economy is likely to grow by 1.5%. Armswissbank was less optimistic saying the growth   may vary between  1%-5%, while Araratbank put it between a zero and a 2% growth.

Independent experts’ assessment were different. Thus, ex-governor of the Central Bank, Bagrat Asatrian saw no preconditions for growth,  predicting an average annualized  2%  decline, saying also it may be within 1%-4%. He was the most pessimistic of all experts polled by ARKA. Against this backdrop Heghine Manasian, director of the Caucasian Center for Research Resources, said the GDP may grow as much as 3%. She did not rule out a double-digit growth- up to 15%. By the way, she was the most optimistic of all polled experts. Edward Sandoyan, a former finance minister, now pro-rector of the Russian-Armenian (Slavonic)  University and Manuk Yergnyan, head of Economy and Values think-tank, predicted a 1.% GDP growth. But unlike Sandoyan who is sure of the growth, that may vary between 1-3 percent, Yergnyan was more cautious saying the GDP may grow by 3%, but  may also fall as much.

Journalists writing on economic issues were  optimistic.  Particularly, Ashot Aramian, a correspondent for the Russian language newspaper Golos Armenii,  believes that the growth may be within 3%-6%. Hermine Baghdasarian, an economic correspondent for  Haylur information program of the Public TV-Channel One, said the  most plausible rate is a zero growth, but she did not rule out  a 3% decline or a 1% growth.

Ara Martirosian from Azg daily and Vasak Tarposhian from Hayots Ashkhar daily projected a growth within 1-3%. Armenak Chatinyan from Kapital daily said it is likely to grow by 1.3%.

Exchange rate of one USD nears 400 Drams

The overwhelming majority of experts endorsed the Central Bank decision in 2009 March to  reverse  to the floating exchange rate of the national currency, the Dram,  against major foreign currencies, saying it was  a move that helped salvage the country’s financial and banking systems. Following it the Central Bank said it was not going to forecast the exchange rate of the national currency and would not interfere with the situation at the market. The majority of our respondents, except for  Armenak Chatinyan, Ara Martirosian and Heghine Baghdasarian, had  no doubts that the exchange rate of one USD dollar  would surpass beyond  400 Drams.

They argued  by saying if domestic and foreign markets-related expectations materialize, the  national currency may gain up to 5% and trade at 340-380 Drams.  Ara Martirosian predicted that the exchange rate may fall up 365-375 Drams per one USD, while Heghine Manasian predicted a 360 Drams forecast.

Manuk Yeganian predicts that  the exchange rate may vary between  370-460 Drams, while Hermine Baghdasarian, Ashot Aramian as well as representatives of Araratbank and Armbusinessbank believe that the USD will  be trading well above the 400 ceiling. Representatives of Armswissbank and Armeconombank  as well as Edward Sandoyan predicted an exchange rate between 380-400 Drams, while Vasak Tarposhian and Bagrat Asatrian expect the USD to trade at 390-405  and 370-410 Drams respectively.

By the way, although the government budget for 2010 says  has set a 376 Drams exchange rate per one USD, by March 17 it was trading at an exchange rate above 400 Drams.

Inflation rate forecasts

The last thing we asked our respondents about was their forecasts about the inflation rate. According to the Central Bank, the inflation rate in February rose to 9.4% from the same period of time last year. It also predicted a gradual decline beginning from March. In this light Heghine Manasian’s forecast about a 17-20% full-year inflation rate looks very pessimistic. Edward Sandoyan’s forecast was within 1-3%.

All other respondents seemed to agree with the Central Bank assessment  that the 9.4% inflation rate registered in February will be the highest index  this year, but none believes that the government will be able to meet the projected target of  4 ±1,5%. A 6% forecast predicted by Armeconombank, Araratbank and Armenak Chatinyan is most close to the government projected target. According to the latter, the inflation rate will be pushed up by the rise of prices of natural gas, sugar and wheat.

Ashot Aramian, Vasak Tarposhian, Bagrat Asatrian  and  a representative of Armswissbank said the annualized inflation rate will be about 7%, almost as much as in 2009, while Ara Martirosian and a representative of Armswissbank said it may fall to 6.5%. Incidentally, this viewpoint is shared by Aristomene Varoudakis, head of World Bank Yerevan Office. Mark Lewis from the IMF said in the first half of the year inflation will be higher than in previous years but beginning from the second half of the year it will gradually decline to  an annualized  6%.

In conclusion   we would like to thank all respondents  for their willingness to take part in our survey. Certainly, we would like Armenian banks and other financial organizations to be more active regarding our initiative. ARKA news agency plans to conduct such surveys at least  once in six months that will allow to look into processes as they occur. Unlike Central Bank’s forecasts  which we follow and welcome, our surveys will present the assessments of market participants, journalists covering related subjects and experts. As we have said above, our goal is to help shape a community of professional economic experts. We also plan to expand the frameworks of our questions and attract new experts, journalists, and market participants. -0-