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Social Snapshot and Poverty in Armenia

November 28, 2012

Yerevan, November 28, 2012 –The National Statistical Service of the Republic of Armenia (NSS RA) has released the Social Snapshot and Poverty in Armenia, 2012”. The main objective of the report, based mainly on the 2011 Integrated Living Conditions Survey (ILCS) data, is to inform the public about the poverty level and social situation in the country. This volume is the thirteenth in this series of reports, produced by NSS RA on annual basis. The World Bank has been supporting the NSS RA, in particular by providing technical advice on poverty measurement and analysis.

The poor are defined as those with per adult consumption equivalent below the upper total poverty line; the very poor are defined as those with per adult consumption equivalent below the lower total poverty line, whereas the extremely poor are defined as those with per adult consumption equivalent below the food poverty line. In 2011, the total – both upper and lower, as well as the extreme poverty lines per adult equivalent per month were estimated to be AMD 36.158 (or USD 97.1), AMD 29.856 (or USD 80.2) and AMD 21.306 (or USD 57.2) respectively.

The report highlights the adverse impacts of the financial crisis that hit hard the Armenian economy, starting in the fourth quarter of 2008. Over 2008-2011, the key factor behind the increase in poverty incidence was the deep recession of the economy, reaching 14.1 percent in 2009. In 2010, Armenian economy witnessed modest 2.2 percent growth. In 2011, it recorded 4.7 percent growth as compared to 2010. In conjunction with increasing income inequality, deep economic recession contributed to decreased consumption of the population. ILCS 2011 results show that average monthly real consumption of the whole population decreased by 6.1 percent as compared to 2008. Such decrease was observed in all quintiles of consumption.

Although in 2011 poverty incidence decreased slightly as compared to 2010, the incidence of poverty and its gap, as well as severity increased as compared to 2008. In 2011, more than third of population (35.0 percent) was poor, 19.9 percent was very poor and 3.7 percent was extremely poor. In just three years (2009-2011), some 250 thousand people became poor. The number of the poor in 2011 was around 1.1 million (per resident population). Over the same period, some 240 thousand became very poor; the number of the very poor was 650 thousand. Within these three years, around 70 thousand became extremely poor, the number of the extremely poor in 2011 equaled to around 120 thousand.

In 2011, extreme poverty incidence increased compared to 2008, growing by 2.3 times (or by 2.1 percentage points); for very poor it increased by 1.6 times (or by 7.3 percentage points), and total poverty grew by 26.8 percent (or by 7.4 percentage points). Poverty in 2011 became deeper and more severe. Estimated poverty gap in 2011 was 7.9 percent as compared to 5.1 percent in 2008 (an increase of 1.5 times), whereby the severity of poverty was estimated to be 2.4 percent as compared to 1.4 percent in 2008 (an increase of 1.7 times).

In 2011, poverty indicators did not significantly differ by urban (35.2 percent) and rural (34.5 percent) areas.

Over 2008-2011, the poverty incidence in rural areas increased faster than in the urban areas (7.6 vs. 7.0 percentage points). The capital city, with the lowest poverty incidence (27.5%) in the country, suffered less due to global economic crisis in comparison with other urban areas. In 2011, poverty in Yerevan increased by 7.4 percentage points as compared to 2008, while in other urban areas the increase totaled to 7.8 percentage points. In terms of urban-rural differences of welfare, majority of the poor (64.8 percent) and the extremely poor (80 percent) were urban residents.

Inequality indicators measured by the Gini coefficient indicate that inequality is deeper in terms of income distribution than in terms of consumption distribution.  Consumption inequality measured by the Gini coefficient increased from 0.242 in 2008 to 0.267 in 2011. Income inequality, in turn, increased from 0.339 in 2008 to 0.371 in 2011.

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