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World Markets Research Centre
Global Insight
July 22, 2010
Armenian H1 Trade Deficit Still Wide Despite Surging Exports
BYLINE: Venla Sipila
According to the latest foreign trade figures from the Armenian
National Statistical Service quoted by ARKA News, goods exports from
Armenia in the first half of 2010 amounted to US$442.8 million, rising
by 55.9% year-on-year (y/y), whereas imports during the same time rose
by 24.4% y/y totalling US$1.724 billion. Thus, the trade balance in
January-June showed a deficit of US$1.281 billion. Over the whole of
last year, the trade gap measured some US$2.6 billion, equivalent of
around 30% of GDP (seeArmenia: 27 January 2010:).
Significance:The first-half data signal some slowing of annual export
growth over the second quarter, whereas the increase in imports has
remained relatively stable (seeArmenia: 21 April 2010:). While the
reported export growth still is very rapid, it is recovering from an
extremely weak position. The Armenian trade gap remains worryingly
deep, the current level corresponding to some 37% of the first-half
GDP, which has been reported at around 1.3 trillion dram (US$3.5
billion). The trade gap is further reflected in a wide overall
current-account deficit, and given limited access to especially
non-debt-creating external financing, it is not sustainable
(seeArmenia: 7 July 2010:). Encouragingly, the Armenian government has
outlined some measures aimed at diversifying the economy, but a lot
still needs to be done before the economy becomes more competitive and
attractive for private investment. Given the increase in the price of
natural gas imports from Russia from the beginning of April, pressures
on the external position will also remain, and it is possible that the
dram exchange rate may have to weaken further in order to secure
sustainability.
From: A. Papazian
Global Insight
July 22, 2010
Armenian H1 Trade Deficit Still Wide Despite Surging Exports
BYLINE: Venla Sipila
According to the latest foreign trade figures from the Armenian
National Statistical Service quoted by ARKA News, goods exports from
Armenia in the first half of 2010 amounted to US$442.8 million, rising
by 55.9% year-on-year (y/y), whereas imports during the same time rose
by 24.4% y/y totalling US$1.724 billion. Thus, the trade balance in
January-June showed a deficit of US$1.281 billion. Over the whole of
last year, the trade gap measured some US$2.6 billion, equivalent of
around 30% of GDP (seeArmenia: 27 January 2010:).
Significance:The first-half data signal some slowing of annual export
growth over the second quarter, whereas the increase in imports has
remained relatively stable (seeArmenia: 21 April 2010:). While the
reported export growth still is very rapid, it is recovering from an
extremely weak position. The Armenian trade gap remains worryingly
deep, the current level corresponding to some 37% of the first-half
GDP, which has been reported at around 1.3 trillion dram (US$3.5
billion). The trade gap is further reflected in a wide overall
current-account deficit, and given limited access to especially
non-debt-creating external financing, it is not sustainable
(seeArmenia: 7 July 2010:). Encouragingly, the Armenian government has
outlined some measures aimed at diversifying the economy, but a lot
still needs to be done before the economy becomes more competitive and
attractive for private investment. Given the increase in the price of
natural gas imports from Russia from the beginning of April, pressures
on the external position will also remain, and it is possible that the
dram exchange rate may have to weaken further in order to secure
sustainability.
From: A. Papazian