World’s financial crisis: How to survive Armenia’s economy?

I remember, after the first signs of the crisis, Armenian officials were quick to deny any dramatic impact of it on Armenia. However, with each passing week, the potential impact of the crisis was becoming so apparent, that tone of the government officials changed, and they started mentioning the possibility of economic downturn in Armenia as a result of the world crisis. Knowing local mentality, I can safely predict that from now on whatever bad happens in Armenian financial-economic field would be blamed on the world crisis. Partly, it would be true, but only partly. There are ways to diminish its impact however. But it requires proper crisis management with a scope of preventive actions. Policy Forum Armenia independent think-tank produced report on Implications of the World’s Financial Crisis for Armenia’s Economy.

We all know that in case of health problems, it’s much more efficient to prevent the disease than to treat it. So is with the economy. Report warns that “recent developments in emerging markets suggest that the crisis-related deterioration of the economic outlook is likely to occur abruptly with little (if any) signs of early warning”. Based on the analyses of specifics of Armenia’s economy and global trends, Policy Forum Armenia offers recommendations on essential “pre-emptive policy response and crisis preparedness efforts”.

Some of the main dangers to Armenian economy may come from: “(1) slowdown in remittances flows, (2) reduction in trade and investment, (3) problems originating from the financial sector, and (4) reduction in official assistance.”

While mentioning “capable Prime Minister”, the report is less convinced with the “relevant agencies—the Central Bank and line ministries” which “have limited capacity and experience to address the potential risks” and questionable coordination between each other and the cabinet.

One of the main recommendations by the Policy Forum Armenia is to establish a Crisis Prevention Team (CPT) “as a high-level policy advisory body to the government. Reporting directly to the Prime Minister, the CPT should consist of economists and financial sector professionals with strong reputation and experience in dealing with crisis countries. To be seen as credible it should include Diaspora and also possibly non-Armenian professionals and should be nonpartisan.”

Full report is available here