Since the start of revolutionary processes in mid-April, Armenia has been facing mass demonstrations, strikes and blockades of both domestic and interstate roads. The authorities warn that this may affect the economy, which, according to them, recorded a 7.5% growth in 2017.

Is this true? How will the Armenian economy behave in the first half of 2018? Have the ongoing processes affected it?

“If we continue like this, we will face economic problems: tourists are not visiting us, investors are going away, we are to conduct a new conscription this summer, we still have lots of problems to solve. This all may affect Armenia in future… I am keeping my finger on the pulse and I see that we are losing tourists and investors and may face an economic crisis,” says Acting Prime Minister of Armenia Karen Karapetyan.

In an earlier interview with Shant TV, former president Serzh Sargsyan said that political risks might affect the economy. “In 2017, we had no shocks and managed to ensure a 7.5% economic growth,” he said.

These warnings have given rise to certain fears that the Armenian economy may be “Ukrainized.” After the Maidan 2015, Mikheil Saakashvili, who was the governor of Odessa Oblast at that time, warned that it would take Ukraine as many as 20 years to go back to the economic level of the Yanukovych times. Today we are wondering if it ever will? But for Armenia – a country facing a partial blockade and a de facto war with Azerbaijan – even this seems to be a very optimistic outlook.

Some experts think otherwise though: they say that the Armenian economy has not been seriously affected and that the bloodless velvet revolution may lead to political and economic improvements.

The most affected sector is tourism. “Before April, we had plenty of customers. All of our tours were booked. But after the April events, as many as 70% of the bookings were cancelled. We are sustaining huge losses as a result. We hope that things will improve as soon as this force majeure comes to an end, but many of our customers have already gone to other countries and will not come this year,” an anonym from an Armenian travel agency told EADaily.

In Armenia politics and economy are deeply interwoven: so, political shocks cannot but affect the economy. But there are experts who are optimistic and say that this is just a breathhold for the Armenian economy.

“We are not facing any panic or outflow of capital. The Armenian national currency, AMD, is stable. So, we have no grounds for panicking,” economist, founder of the b4b.am economic portal Babken Tunyan told EADaily.

After Sargsyan’s resignation, the leader of the protest movement Nikol Pashinyan urged Armenian businessmen not to pack their things as there would be no vendetta. “Some businessmen are reportedly packing their things for fear of vendetta. Please, don’t do it! There will be no revenge, no hatred. From now on Armenia will live in an atmosphere of fraternity, equality, justice and national unity,” Pashinyan said.

Armenia’s foreign obligations are also stable. “Armenia’s Eurobonds are stable, which means that foreign investors have not lost their interest in the country. That is, the ongoing political processes are not affecting them. The financial situation is stable,” Tunyan said.

“People are mostly optimistic as now they have hope and this cannot but inspire the economy,” Tunyan said, noting that the Central Bank of Armenia was effectively operating throughout the processes.

Economist Mesrop Arakelyan is of the same opinion: “Today Armenia’s financial system is as stable as it was before the velvet revolution.”

According to a source from the Central Bank of Armenia, the situation in the banking sector is stable. “And even though our customers are not taking their money, we are taking preventive measures to attract more funds and to make our banks more efficient. When the crisis was at its peak, some customers were frightened but now the danger is over and there is no more panic,” the source says.

Tunyan notes that some political figures from Sargsyan’s team may face certain problems with their businesses. “But this will hardly cause an economic collapse. The ongoing processes may have affected SMEs but they are not complaining as they are looking forward to better times,” the expert says.

Arshaluys Mgdesyan, specially for EADaily