According to the latest national accounts figures from the Armenian National Statistical Service, the country's economy collapsed by 17.5% year-on-year (y/y) in January-October, ARKA News reports. In October alone, GDP contracted by 5.1% from September. Coming after the January-September contraction of 18.3% y/y, these most recent figures suggest some moderation in the rate of annual output decrease in October.

However, this does not provide much reason for cheer, especially compared with the very respectable economic growth rate of 9.2% y/y seen in the first 10 months of last year. Industrial output in January-October fell by 11.4% y/y, whereas activity in the construction sector plummeted by 41.6% y/y. Meanwhile, agricultural production fell by 0.8% y/y. Further, it was reported that exports from Armenia in the first 10 moths of the year suffered a fall of 40.7% y/y, amounting to US$551.6 million, while imports at the same time contracted by 28.5% y/y, totalling US$2.57 billion.


Thus, the trade deficit for the January-October period came in at US$2.018 billion. The figures suggest some deceleration in the annual exports contraction in October, whereas the fall in imports slightly accelerated. In October alone, exports decreased by 1.4% from September, while imports increased by 6.1% from the previous month.


Significance: Whereas the severe collapse of the Armenian economy now should start to ease, as cautiously suggested by the latest data, the still worse-than-expected performance in the third quarter justified yet another downward revision in IHS Global Insight's Armenian GDP forecast in the November round. We expect 2009 annual contraction to somewhat exceed the lower end of the government's forecast of a 10–15% fall. The extreme severity of the current Armenian economic conditions, including its major liquidity pressures, has been underlined by the fact that it has had to seek revisions to its stand-by arrangement with the International Monetary Fund (IMF), which has approved changes to programme terms and payment schedules (see Armenia: 3 November 2009:).

