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Armenian Consumer, Business Confidence Weaken in Q4 2007

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  • Armenian Consumer, Business Confidence Weaken in Q4 2007

    Global Insight
    January 3, 2008


    Armenian Consumer, Business Confidence Weaken in Q4 2007

    by Venla Sipila



    The quarterly confidence survey published by the Central Bank of
    Armenia (CBA) shows that sentiment among Armenian consumers and
    businesses continued to weaken over the fourth quarter of 2007, after
    slipping over the previous quarters. According to ARKA News, the
    composite index of consumer confidence fell to 48.6 after standing at
    52.7 in the third quarter. In the fourth quarter of the previous
    year, the index had stood at 50.3. Thus, the last quarter of 2007 saw
    the index fall below the 50-point mark, indicating that expectations
    have turned negative. Further, it was reported that the economic
    activity index registered 54.4, falling markedly from the third
    quarter reading of 69.2.

    Significance:The decrease of the consumer confidence index below 50
    points is significant as this is the critical value separating a
    negative from a positive outlook. Economic activity in Armenia is set
    to weaken, after 2007 looks certain to prove the sixth consecutive
    year of annual growth at double-digit rates (seeArmenia: 14 December
    2007: ). Looking further, growth at such high rates is unsustainable.
    Extremely rapid economic expansion also brings with it concerns
    regarding overheating. Indeed, the International Monetary Fund (IMF)
    has cautioned that it is imperative for Armenia to ensure that
    macro-economic policy is consistent with keeping inflation under
    control.
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