ArmInfo.The sharp acceleration in the growth of economic activity in February of this year in Armenia is due to a short-term factor, reads a report by the Luys Foundation, whose experts analyzed the data of the RA Statistical Committee for January-February 2024.
As the Fund's experts note, the economic activity rate in February was 16.3%, which, however, was mainly due to a sharp increase in jewelry production. "This is dangerous because the jewelry industry is completely dependent on external factors that are unpredictable, and due to a sudden change in the external environment, a complete cessation of activity in this market is possible.
Along with the high rates of industrial growth due to the jewelry sector, some sectors of the manufacturing industry, which are important for the economy of the Republic of Armenia, continue to decline. In particular, in food, tobacco, clothing, chemical and chemical products in January 2024, there was a decrease in production volumes year on year. It turns out that the types of relatively stable and long-term activities of the manufacturing industry are declining, while short-term activities are increasing significantly, worsening the structure of foreign economic activity," the Fund's statement notes.
It is noted that the jewelry and cutting industry more than doubled due to the growth of the jewelry production industry. "Of course, an increase in export volumes is at least a positive factor, in the sense that there is an influx of foreign currency into the economy, but if we take into account that in this case we are simultaneously dealing with almost the same volumes of imports, this positive effect is significantly neutralized.
The most significant issue is that against the backdrop of high growth rates, existing problems in the field of exports are relegated to the background, in particular, a decrease in export volumes of a number of goods. In January, in particular, export volumes for such product groups as "finished food products" and "animals and products of animal origin" decreased; a significant drop in exports of mineral products is also problematic," the report notes.
It is noted that in conditions of accelerating economic growth, tax revenues are growing at a rather slow pace. In January-February 2024, the growth in tax revenues amounted to 7.9%, and if the indicators of income tax returns are comparable with the indicators of 2023, the growth will be only 3.7%. "Naturally, this is a concern given the increase in spending by more than 30%, as well as the government's policy goals of increasing the tax-to-GDP ratio. In this regard, the government should intensify efforts in tax administration of jewelry activities, which will allow it to more effectively manage the growth rate of this type of activity on the one hand, and help increase tax revenues on the other hand," the authors of the study believe.
According to official statistics, in Armenia, the growth of economic activity in January-February 2024 accelerated to 13.6% per annum (from 10.9% in the same period in 2023). The growth driver was the industrial sector. As preliminary data from the RA Statistical Committee indicate, this was accompanied by a noticeable acceleration in the upward dynamics of exports and imports. Despite the fact that the preliminary statistical report does not provide for the disclosure of more detailed information, nevertheless, judging by the data of previous months, it can be assumed that high growth in the industrial sector comes to a greater extent from the jewelry industry, and to a slightly lesser extent from the leather industry, woodworking industry, production of