The Black Sea and the Caucasus region is a promising market in the forecourt of Europe. The huge potential can be realised through targeted economic, political, cultural and scientific cooperation.
New, promising markets
Last summer Foreign Minister Michael Spindelegger and Economics Minister Reinhold Mitterlehner agreed on the huge potential in the Black Sea region that Austria could take greater advantage of. “Economic and foreign policy there work closely together in order to tap into new markets and opportunities hand in hand”, emphasised Spindelegger and Mitterlehner. A study of the Black Sea region, commissioned by the Foreign and Economic Ministry of the WIFO, recommended a “systematic pursuance of opportunities on the business and political level”, as relationships are “good, but clearly ripe for further development”.
(Find more about Austria’s foreign trade relationship with the Black Sea region and its economic perspectives)
In the light of the Austrian export drive of the last few years and the increasing demand of external foreign trade partners, Armenia could offer, amongst others things, interesting future opportunities. This small country with a population of slightly over 3 million, halted the downturn in economic performance that resulted from the collapse of the USSR in the mid 1990s; its economic performance now is 30% above that of 1989 levels.
Badly affected by the Crisis
This growth was supported in part by foreign bank transfers and loans that flowed into consumption and construction from overseas. It is for this same reason, however, that the financial and economic crises impacted Armenia the hardest of all countries in the region since the transfers from Armenians abroad dried up. In summer 2010, Germany Trade and Invest (gtai) reported that Armenia’s economic crash in 2009 was the most dramatic for 16 years. “The GDP sank by 14.4%, whereby construction (-42%) and energy production (-14%) in particular, nose-dived. Tax revenue in 2009 was considerably reduced, thus increasing the budget deficit to 4.7% of GDP (compared to the 2008 figure of 0.7%). National debt hit a value of over 40% of GDP. Nonetheless, the International Monetary Fund (IMF) considers Armenian debt to be under control and estimates the figure to drop below 40% after 2013”.
Noticeable improvement since 2010
New reports relating to the fiscal year change 2010/2011 assumed that the Armenian economy had markedly gained momentum in the first months of 2010, with a rise in GDP of 7.2% between January and April compared with the same period of the previous year. Industrial production (+13%), construction (+9%) and power generation (+14%) showed particularly strong gains.
Given the good figures, the World Bank already expects a clear increase in GDP of 4.5% for 2010. The Asian development Bank (ADB) was somewhat more cautious, offering a forecast of 1.5%, which is consistent with the 1.2% economic growth figure assumed in the Armenian budget for 2010. According to the current World Economic Outlook for the year 2010, the IMF calculated a growth of 4% and for 2011, analysts believe in a continuation of the recovery. The IMF expects an increase of 4.6%.
New projects, new chances
In the near future, good opportunities will be found in the health sector, tourism, energy production, educational system and in the IT sector. According to data from gtai “within the next 2 years for example, all public services should be available online. Moreover, Armenia plans to have high-speed internet connections with 100Mbit/s installed in all 10 administrative districts. The World Bank and EBRD have announced that they will take a stake in the financing”.
New technology parks, the search for investors in projects in the electricity industry, and consideration of the development of alternative energy are as equally interesting as the schemes regarding the modernisation of agricultural production and the infrastructure (road, rail, underground, bus) that are to be made possible by project financing through the Asian Development Bank (ADB).
For Austrian companies, the Armenian ambition in tourism could also prove to bear good prospects. The planned “Jermuk Spa and Ski Resort”, the development of the Dschermuk health resort in the south of the country and new hotel complexes should in the long run, give the already growing tourism new impetus.
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