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Global Insight
May 3, 2012
Armenia's Q1 Trade Gap Remains Stable Y/Y
BYLINE: Venla Sipila
According to the latest customs-based trade data from the Armenian
National Statistical Service, exports in March soared two-thirds
year-on-year (y/y), bringing total exports for the first quarter of
the year to USD347.6 million, up 32.4% y/y. Meanwhile, imports
increased by 7.2% y/y in March and by 9.8% y/y in the first quarter,
totalling USD956.1 million in the first three months of the year. The
resulting trade deficit of USD608.5 almost exactly matches the gap in
the same period a year ago. According to further details, exports of
vehicles soared, as did exports of precious and semi-precious stones
and items. On the import side, mining products increased most (by 40%)
and also formed by far the largest category. Meanwhile, imports of
machinery and equipment gained over 6%. Just over half of Armenia's
exports were directed to EU countries, but it grew slower than total
exports.
Significance:Metal prices are still boosting export values. However,
while high prices are still benefiting Armenian terms of trade and
exports values, this impact is expected to start fading now, being
more muted especially in the second half of the year. This will
further be reflected in weakening industrial growth. As the Armenian
economy is very dependent on imports both for consumption and
investment goods, imports are expected to remain fairly high even as
the overall economic growth is now slowing, and thus, more muted
aggregate demand should be have some suppressing impact on imports as
well. The trade deficit thus remains wide enough to have a notable
deteriorating impact on Armenia's current account gap. This external
deficit is a key source of financial risks for the country, especially
as remittance inflows, which provide for a non-debt-creating means for
financing the trade gap, are also subject to some risks given the
persisting instability in the external economic environment.
May 3, 2012
Armenia's Q1 Trade Gap Remains Stable Y/Y
BYLINE: Venla Sipila
According to the latest customs-based trade data from the Armenian
National Statistical Service, exports in March soared two-thirds
year-on-year (y/y), bringing total exports for the first quarter of
the year to USD347.6 million, up 32.4% y/y. Meanwhile, imports
increased by 7.2% y/y in March and by 9.8% y/y in the first quarter,
totalling USD956.1 million in the first three months of the year. The
resulting trade deficit of USD608.5 almost exactly matches the gap in
the same period a year ago. According to further details, exports of
vehicles soared, as did exports of precious and semi-precious stones
and items. On the import side, mining products increased most (by 40%)
and also formed by far the largest category. Meanwhile, imports of
machinery and equipment gained over 6%. Just over half of Armenia's
exports were directed to EU countries, but it grew slower than total
exports.
Significance:Metal prices are still boosting export values. However,
while high prices are still benefiting Armenian terms of trade and
exports values, this impact is expected to start fading now, being
more muted especially in the second half of the year. This will
further be reflected in weakening industrial growth. As the Armenian
economy is very dependent on imports both for consumption and
investment goods, imports are expected to remain fairly high even as
the overall economic growth is now slowing, and thus, more muted
aggregate demand should be have some suppressing impact on imports as
well. The trade deficit thus remains wide enough to have a notable
deteriorating impact on Armenia's current account gap. This external
deficit is a key source of financial risks for the country, especially
as remittance inflows, which provide for a non-debt-creating means for
financing the trade gap, are also subject to some risks given the
persisting instability in the external economic environment.