Comments on: Congrats Armenia — we’re #2!

by: Katy

Tue, 31 May 2005 22:16:34 -0700

So why has Armenia done so much better than its neighbors? If the starting point is 1995, you’d think that Azerbaijan would be in the same boat.

by: Nazarian

Tue, 31 May 2005 22:26:57 -0700

Well, in 1994-95, there was very little economy left in Armenia - it was mostly substinence farming with whatever surplus going to the urban dwellers.

There was no industrial output to speak of.

The Armenian government loves to express growth in percentage terms. If they actually show the nominal values, the per capita GDP is still miserably low.

by: Katy

Tue, 31 May 2005 22:28:43 -0700

These numbers are generated by the IMF, not the Armenian government.

by: Onnik

Tue, 31 May 2005 22:41:03 -0700

I think that while it’s good that there’s growth, the figures are based on a low base. Otherwise, what are we suggesting? That the Japanese as the lowest on the G-7 list are in a worse shape than in Kazakhstan, the lowest on the first list of mainly CIS republics? Or in fact that the UK at 26.7 per cent is as well?

There’s also one more inportant issue which is particularly relevant to all the countries but especially Armenia where social inequality is higher than almost all the others.

That is, the distribution of wealth. Now, if we can only sort that out and improve tax collection from the richest in the country…

by: Katy

Tue, 31 May 2005 22:59:19 -0700

It is nice to know that it is growing at least and apparently faster (over 10 years) than a lot of its neighbors.

by: nino

Wed, 01 Jun 2005 00:15:08 -0700

This doesn’t mean anything at all like many people have said.
If you start from 0 then obviously GDP growth will be very very high indeed!

I think all these suggests is that those countries on top suffered the most economically at the break up of SU. So the output was basically very near to nothing at all so GDP could only grow fast.

The actual GDP for Armenia is 13.65 billion
Georgia is 14.45 billion
And Azerbaijan so much higher it would give you a heart attack

I still wonder how we manage to produce that much!!!

by: nino

Wed, 01 Jun 2005 00:39:18 -0700

Azerbaijan 30bn. (I managed to find it)

But after they start pumping oil God knows how much that’s gonna grow.

by: Onnik

Wed, 01 Jun 2005 01:07:33 -0700

Re. Azerbaijan, a lot is also going to depend on the distribution of wealth. I’m sure there’s going to be a lot of trickle-down but I also think that the danger is corruption and that social polarization will rise. If the Council of Europe and other organizations and donors are worth their salt they will make sure that this does not happen. However…

by: nino

Wed, 01 Jun 2005 01:18:14 -0700

Well distribution of wealth won’t have anything to do with GDP but overall sure….

You know, I have totally utterly lost any hope in any kind of orginisations wheather it’s Council of Europe, European Union or the United Nations. I don’t think I am alone!

by: Hovakim

Wed, 01 Jun 2005 03:15:19 -0700

The ‘purchasing-power-parity’ GDP figures are hugely misleading, most economists use the real numbers or adjusted for inflation. Armenia’s is 3.4 billion dollars for 2004, I think.

If you look at the growth rates in 1994-1995, the post-Socialist and post-Soviet states would be top growth countries, because of the economic collapse in 1991-1994. A more accurate description is the current GDP as percentage of 1989 GDP. On that score, Armenia is also doing better than either of its regional neighbors - in 2005, we will reach 98% of Soviet Armenia’s 1989 GDP level. Azerbaijan’s is in higher 80’s, Georgia is in low 80’s. Belarus has already reached the 1989 level last year.

Of course, in case of Armenia, the 1989 GDP itself contracted by 30% over 1988 because of strikes, Spitak earthquake, and Azerbaijan’s blockade.

Numbers, such as growth rates, don’t tell the entire story, as the GDP and national income is not evenly distributed. Nevertheless, the growth is real, and so is transformation of the economy from heavy-industry dominated into primarily services, agriculture, and light industry driven. Agriculture contributes 30% of the GDP, while services contribute almost 40%.

If you look at machine building and such holdovers from Soviet era, the production is far, far less than it was in 1989. In real life terms it means that cities like Charentsavan, Hrazdan, Kapan, Vanadzor are slowly rusting away - they are the Pittsburgs and Buffalo’s of Armenia.

A good source is Armenia’s statistics agency website www.armstats.am