Several official figures have been published recently suggesting that Armenia is in a downward economic spiral as a result of the global recession. In the first two months of the year, the economy receded 3.7 percent according to official statistics, and the dram devalued about 20 percent from 305 to 370 against the dollar in a single day. Armenian exports have been cut by 40 percent, not that there are many to begin with—they are mostly copper and ore exports. Some companies IT-related or otherwise have already shut down or have scaled back, but in the case of Lycos Europe, I know from a friend who used to work there that many of its employees, mostly software programmers, have already found work. In some companies, including the one where I work, employees were asked to take a pay cut, around 5 percent or less depending on the firm’s financial situation.
While the slowdown is supposedly continuing, Armenia is receiving a $540 million loan from the IMF, approved in April. And another $500 million is expected from Russia, as announced last month. The World Bank has pledged to provide $50 million in loans which will be redistributed to small and medium-sized banks via the banking sector. Between the World Bank and the IMF, $320 million in loans have been handed down since the beginning of 2009. A metallurgical company based in Syunik has already received a $10 million loan to help keep it afloat. Given these facts and figures things don’t seem that bleak.
During this economic “slowdown” Armenians continue to go about their business in Yerevan. Shops are thriving, the markets and minibuses are packed and the automobiles seem to keep increasing. Some stores and restaurants do close, but the spaces are rented to other businesses, sometimes in a matter of days or a few weeks, as was the case even before the recession. I only know of one person who is looking for work, but it’s just a matter of time before he finds something I think. Meanwhile, the situation in many rural areas, from what I have seem myself and what I have been reading on Hetq Online, isn’t changing much with poverty persisting unabated. Village life has never really improved despite Armenia’s economic boom, so for Armenia’s poor there is no noticeable difference in the quality of life.
Armenia’s GDP of has already contracted 6 percent because of the downturn in the construction sector. In April the National Statistical Service claimed that in the first quarter of 2009, construction had decreased 22 percent, yet when I look out the window or walk down the street in the Gomidas district I see that buildings continue to be erected. The government is distributing $54 million in loans to construction companies. But do they really need the money?
Armenians working abroad, especially in Russia, are losing jobs, but it won’t be long before they find something else to do somewhere, perhaps in another country, maybe even in Armenia.
So what’s going on here? Which segment of Armenia society is feeling crunched by the recession? And will it ever be made obvious? And where will all those hundreds of millions of dollars in loans go exactly? That hasn’t been made clear. I can’t see anything changing in spending habits. Armenian society has been polarized for well over a decade. People who have are spending, and people who are barely surviving on pensions or meager wages are not, but it’s been that way for years. So aside from official published statistics, there doesn’t seem to be any noticeable evidence of a recession in Armenia.