President Robert Kocharian indicated last week he's likely to form a new cabinet after the elections with Miasnutyun and Dashnaktsutyun. After eight years of reforms, economic liberalism appears badly discredited. The beginning of the reforms coincided with an intensifying war with Azerbaijan over the disputed Nagorno-Karabakh territory, which hampered their success. The Armenian economy contracted 60 percent during the years 1991-93. A policy of tight fiscal and monetary measures has put the economy back on track and it has been growing since 1994, but the growth so far has not made a major impact on living standards.
Unemployment is very high and high interest rates stifle growth.
Economists say single-digit growth is not sufficient for a quick improvement. The main liberal parties, allied with former President Levon Ter-Petrossian, have mostly been discredited and stand little chance of success in the elections. President Kocharian has no party of his own to further his overall liberal ideas. Job creation features in all party platforms. Demirchian's Miasnutyun bloc says Armenia's central bank should focus on lending money to stagnating industries at rates lower than commercial banks can offer.