Eurozone crisis ‘to hurt’ Armenia

Well-known media outlets, and not only Europe's, continue to comment on results of the recent EU summit in Brussels. The summit, as it was expected, focused not on the deepening of European integration, fate of the European Constitution or drafting of the documents that can substitute for it, but on the economy. More precisely, ways to rescue the euro and the entire euro zone during the current crisis.
 
Perhaps, even non-specialists can name the causes of this and the fact that Eurozone brought together countries with very dissimilar 'budget mentality' and now for bounties of some countries' governments should pay taxpayers of others-just one of them. Major rating agencies reduce the economic sustainability of France, almost "junk" prospects loom in front of Italy, Greece is still in deep economic crisis, unemployment hits record in Spain, in Belgium the government introduces a mode of economy and it has caused a nationwide strike - for the first time in 40 years ...

One thing is clear, in today's globalized world all these can not be considered as individual problems of Greece, Belgium, France and Spain, or even of the "euro zone", despite its fencing off from the rest of the world with visa barriers.

The economy of different countries is too intertwined today. Experts warns that only the economic crisis in Bhutan or Vanuatu that accidentally voted for Armenia in the UN can be 'national', but not the one in the economically vital region. "The Great Depression" that began in the United States in 1929 can be cited as example here. The Asian crisis of the late nineties, financial crisis beginning with 'mortgage debt' in the US, finally, the crisis in the eurozone - all they got and will always get a global 'interpretation'.
 
Surely, it affects countries differently. The economic growth in Azerbaijan declined from 36% to 9% in the crisis years, while in Armenia's economy has collapsed by 15% - as they say, feel the difference.

Today, replying to the question about which country (excluding, of course, Europe itself) will mostly suffer from the crisis in eurozone, most experts agree that the hardest second wave of the 'Euro crisis' will hit Armenia.
 
In the economic theory a possible damage is calculated simply: it is necessary to analyze the structure of the country's foreign economic relations. The more the proportion falls on the "crisis zone", the harder risk and severe consequences. The second risk factor-the structure of the exports; first of all, commodity prices decrease in the crisis.

This 'alphabetic' analysis shows that the threat to Armenia's economy is more than real. Its exports basis on the raw materials, particularly products of mining and nonferrous metals, and the price for them will fall significantly. The country's exports largely oriented to Europe and Russia, which, in turn, also depend on the European economy. These expectations were voiced first following the media reports that Moody's has lowered Armenia's credit rating to Ba2, noting that only Madagascar faced the harder situation than Armenia.

And just here national or rather the national-economic specificity is seen. More precisely, the 'robustness' of the economy in different countries. European troubles are unlikely to mean economic catastrophe for Russia - as the country has a Stabilization Fund and a number of economic and financial 'guarantees' for this situation. But, the situation is different in Armenia. The margin of financial stability is equal to zero here. The country lacks 'stabilization', "guarantee" or other funds, even in good years the country lives 'from hand to mouth'.
 
There is no chance to equalize the situation through loans. Experts say the external debt has already exceeded all conceivable limits, credit rating - Ba2 with a negative trend, and the country cannot rely on loans, and the more privileged under such circumstances. Especially, it will fail to rely on assistance of Diaspora and lobby: to push through the Senate the law of imprisonment for all those who doubt the Armenian myths, which is questionable in terms of compliance with democratic norms, is one think, but to fork out for a real credit - is another.

But most importantly, another aspect of national identity - 'transfer economy' existing in Armenia will play its role here. More precisely, the very shameful fact that a significant portion of Armenian families survives thanks to private remittances from relatives living abroad. The scale of 'transfer economy' is so expanded that the foreign experts talk about the existence in of 'oil disease without oil' in Armenia: the country lives in isolation from its own dying economy.
 
However, Prime Minister Tigran Sarkisian, answering the question whether the country will be able to ensure the forecasted 4% - economic growth, explicitly states that 'this is primarily depends on the expectations of investors and the amount of transfers sent to Armenia'. But, one should take into account that this 'money stream' will inevitably decrease in the crisis period: the Armenian guest workers will not care about relatives.
 
It becomes clear that nothing good can be expected in the near future for the Armenian economy. Moreover, the economic problems of this magnitude negatively affect the financial position of the overwhelming majority of families. The more the family gets poorer, the harder its 'affect'.
 
The very "lacquered" official estimates say that one-third of the population, over one million people, live below the poverty line in Armenia.


/Day.Az/