Situation in Russia may have negative effects on Armenian economy – expert

YEREVAN, March 5. /ARKA/. The current political and economic situation in Russia may have negative effects on Armenia’s economy, head of Economy and Values Research Center Manuk Yerghnyan said.

According to some expectations, foreign investors will sell their assets. Russia’s economic growth has slowed down, and the country is almost in a military situation, which makes stock drop, Yerghnyan told reporters on the sidelines of the presentation of Armenia’s national competitiveness report for 2013-2014.

The ruble versus dollar and euro rate fell to a record-low level Monday, and Russian stocks dropped by more than 6% amid concerns about possible military conflict between Russia and Ukraine. Earlier, Russia’s federation council approved Putin’s request to use armed force in Ukraine. In response, Ukrainian authorities announced total mobilization, and G7 countries (Canada, France, Germany, Italy, Japan, Great Britain and the USA) said they will boycott the G8 summit.

The current situation, according to Yerghnyan, may have several effects on Armenia. First, reduction in investments from Russia should be expected. Russia is also a key export market for Armenia, and dropping demand in Russia may have negative consequences on Armenian exports, he said. Another expected effect is reduction in Russian transfers, according to the expert.

Yerghnyan also said Russian share pushing may be a short-term response to the situation, and no hasty conclusions should be made on this.

If the current situation has effect on exports, foreign investments and transfers, then Armenian dram will tend to devaluate, Yerghnyan said. –0—