Armenia's economic development model is exhausted. This said the head of the South Caucasus and Central Asia Program of the World Bank Genevieve Boyreau in WB's report entitled "Armenia's rating system.results.future". Her assessment she justified by the increase of socially vulnerable strata of the population, which occurs at the expense of the middle class.
According to her, today Armenia needs economic reforms, otherwise the GDP per capita will show "modest" results.

"Armenia faces two main structural challenges that are the aging population and decrease, as well as the climate changes that have a negative impact on economic growth, if reforms do not take place in economic policy",- she said.

According to the WB expert group, the new model of development of Armenia's economy is expected balanced growth in global relations, particularly through increased trade and investment, goods passing liquid assets and services, providing a dynamic, efficient and a competitive business environment, which will create jobs. It is necessary to increase the productivity and flexibility of the new model, which will be more resistant to climate change.

In particular, speaking about the competitive environment, the expert noted that in recent years some steps have been taken in this direction, but they are not sufficient to achieve deep changes, especially in the legal field, and financial access remains a key obstacle to private sector development. According to 2013 data, only 3% of employers are using credit resources and other financial sources in Europe and Central Asia, while the index is about 49%. At the same time, 75% of Armenia's major business credit obligations to banks, while the small business share is of 31%.
The problem so far is the new market withdrawal, difficulties in terms of small businesses, the lack of competition among generating companies, the lack of transparency in state aid, as well as the lack of fair competition in public procurement.
To improve the business environment, WB experts insisted on the need to simplify financial access, expansion of access to innovation, to improve corporate governance and strengthen the effectiveness of competition law, to strengthen the profit distribution, develop modern agriculture.
According to WB experts, in case of the implementation of economic reforms, per capita GDP in 2020 will remain at the same real level of 4 thousand dollars, in 2030 to 6 thousand dollars, and in 2050 will grow up to 12 thousand dollars, but by the actual scenario, this figure does not exceed 8 thousand dollars.
Moreover, after the reform the poverty level by 2020 will drop from the current 30% to 25%, up from 10% in 2030 and 0.2-0.3% in 2050.

As regards to FDI, the World Bank expert said that in 2012-2015 the share of foreign direct investment amounted to 3.7-3.8% of GDP, while the rate was about 7.2% for 2005-2008. From 2004 to 2014, FDI lion's share (49%) fell in the energy sector, while FDI in the last 2 years, 26% was allocated to the energy sector, and 24% of the telecommunications sector. In this regard Boyeva noted that 9-11 million Armenians live in worldwide but the Diaspora's full capacity is not used.

The World Bank forecast of Armenia's GDP growth is 2.7% in 2017, 3.1% in 2018, 3.4% in 2019.

The material is copyrighted and protected by law