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Foreign Investment To Armenia Keeps Soaring Over H1

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  • Foreign Investment To Armenia Keeps Soaring Over H1

    FOREIGN INVESTMENT TO ARMENIA KEEPS SOARING OVER H1
    by Venla Sipila

    World Markets Research Centre
    Global Insight
    September 1, 2008

    According to data from the Armenian National Statistical Service,
    net inflow of foreign investment to the Armenian economy over the
    first half of 2008 totalled $515US.1 million, ARKA News reports. This
    marks an increase of 65% year-on-year (y/y). Further, it was reported
    that FDI made up $352US.7 million of the total. A share of 43.1%
    of total foreign investments (and 62.9% of FDI) was allocated to
    the utility sector, while also the communications sector and air
    transport attracted significant amounts of investment. Russia was
    by far the most important investor country, followed by Argentina,
    Lebanon and the United States.

    Significance:With over 68% of total foreign investment consisting of
    FDI for the whole of the first half of the year, this share increased
    in the second quarter, as the share of FDI in the first quarter of
    the year had been reported at 55%. Despite making a relatively modest
    share of total investment, FDI has in recent years been instrumental
    in financing Armenia's current-account deficit, thus reducing the need
    for Armenia to borrow. FDI inflows have also notably supported Armenian
    foreign currency reserves, which provide Armenia with adequate import
    cover and means for any exchange rate stabilisation needs. However, in
    order to keep attracting increasing amounts of FDI, Armenia needs to
    progress further with its structural reforms. Economic restructuring
    is needed in order to diversify the economy and to strengthen the
    export earnings capacity.
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