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IHS Global Insight
November 21, 2014
Widening Q3 Armenian trade gap underlines external financial risks
According to the latest customs-based trade results published by the
Armenian National Statistical Service, the trade balance in
January-September posted a deficit of USD2.1 billion. This total marks
widening of some 6% year on year (y/y), while being the result of
imports rising by 4.6% y/y and exports gaining 1.9% y/y. In the third
quarter alone, imports climbed by 11.2% y/y, while exports increased
by a lower rate of 4.0% y/y, causing the trade deficit to widen by
over 15% in annual comparison. These results signify deterioration in
over the past quarter; in the second quarter, the trade gap had
widened by a lower rate of 3.2% y/y as the marginal fall in exports
had been combined with a significantly lower increase of 2.0% y/y in
imports.
Significance:Even as the return of export growth in the third quarter
is naturally welcome, the overall picture of Armenian external trade
is fairly weak. Importantly, a widening trade gap increases external
financing risks, given that the current account deficit is still
unsustainably wide, marking notable external vulnerability. Moreover,
Armenian external financial risks have recently increased. This is
because the country is very dependent on workers' remittance inflows,
and the outlook for these has significantly deteriorated with the
economic downturn Russia. As Armenia now has less non-debt creating
foreign financing available, pressures to increase external borrowing
increase. While believe that Armenian access to concessional external
financing should secure adequate external financing, the country's
current-account deficit certainly remains wide enough to suppress its
creditworthiness more generally, and the latest trade results confirm
this.
November 21, 2014
Widening Q3 Armenian trade gap underlines external financial risks
According to the latest customs-based trade results published by the
Armenian National Statistical Service, the trade balance in
January-September posted a deficit of USD2.1 billion. This total marks
widening of some 6% year on year (y/y), while being the result of
imports rising by 4.6% y/y and exports gaining 1.9% y/y. In the third
quarter alone, imports climbed by 11.2% y/y, while exports increased
by a lower rate of 4.0% y/y, causing the trade deficit to widen by
over 15% in annual comparison. These results signify deterioration in
over the past quarter; in the second quarter, the trade gap had
widened by a lower rate of 3.2% y/y as the marginal fall in exports
had been combined with a significantly lower increase of 2.0% y/y in
imports.
Significance:Even as the return of export growth in the third quarter
is naturally welcome, the overall picture of Armenian external trade
is fairly weak. Importantly, a widening trade gap increases external
financing risks, given that the current account deficit is still
unsustainably wide, marking notable external vulnerability. Moreover,
Armenian external financial risks have recently increased. This is
because the country is very dependent on workers' remittance inflows,
and the outlook for these has significantly deteriorated with the
economic downturn Russia. As Armenia now has less non-debt creating
foreign financing available, pressures to increase external borrowing
increase. While believe that Armenian access to concessional external
financing should secure adequate external financing, the country's
current-account deficit certainly remains wide enough to suppress its
creditworthiness more generally, and the latest trade results confirm
this.