Nienke Oomes, IMF Resident Representative in Armenia, welcomes the lower growth rates in Armenia’s construction sector.

Instability is typical of the construction sector. A price rise makes everybody sell their real estate, whereas a fall in prices makes people purchase it. Oomes said. Over the recent years this sector has been rapidly growing in Armenia, and it is even better that slightly lower growth rates have been registered, the IMP official said. On the other hand, she pointed out that some growth in the construction sector is beneficial for the country. So the Armenian Government is right in promoting the completion of construction projects. Ms. Oomes also pointed out the high importance of encouraging other economic sectors, as the Armenian economy has over recent years been too much dependent on the construction sector, Oomes said. According to her, the construction sector accounts for 2/3 of the 18.5% economic decline in Armenia this January-July. At present, she said, the worst moment is past, the higher real estate prices and number of real estate business being evidence thereof.

It should be noted that, according to some Armenian economists, it is the “construction bubble blown” in the Armenian economy that accounts for the strong effect of the global crisis on the country. So, they say, it is wrong to fund the sector considered to be the main cause of the crisis. The point is that the Armenian Government provided guarantees to six construction companies, using the funds of foreign loans. The companies are to complete the construction of six elite buildings in the center of Yerevan. The same economists point out that the flats do not sell, which means the investments have been lost.