ARMENIAN DIAMOND-CUTTING SECTOR SUFFERS 50 PERCENT DECLINE

ARMENPRESS
Jul 23, 2007

YEREVAN, JULY 23, ARMENPRESS: According to Gagik Mkrtchian, head of the
department on precious stones and jewelry at the Armenian Ministry of
Trade and Economic Development, the country’s diamond-cutting industry
suffered a major slump in the first six months of this year reporting
almost a 50 percent decline from a year ago.

He said Armenian diamond-cutting companies produced over the first
six months of 2007 25 billion Armenian Drams (AMD) worth output,
down from almost 38.6 billion from a year ago.

Speaking to a news conference, Mr. Mkrtchian attributed the decline
to several reasons, one of which is that people in the USA, who are
the main ‘consumers’ of diamond items, have revised their consumer
baskets to have replaced this sort of goods with others.

The sector, once announced by the government as one of its major
priorities, has been suffering decline for the fourth consecutive
year after a decade of rapid expansion.

For comparison, Armenian companies produced 117 billion Drams worth
output in 2004, in 2005 the output fell to 113 billion and to 93
billion in 2006.

According to Mkrtchian, only 1.5 percent of these items are sold
in Armenia.

Another, but less significant reason was the unprecedented appreciation
of Armenian Drams against US Dollar, which, according to Mkrtchian,
h has affected exports.

The sector was also affected by the shortfall in anticipated deliveries
of rough diamonds from Russia.

A 2001 Russian-Armenian agreement enabled Armenian companies to
process up to 400,000 carats of Russian rough diamonds annually from
2002 through 2004.

The quota was subsequently raised to 450,000 carats for 2005 and 2006,
but only a fraction of that actually was delivered in 2005 and no
raw-diamond arrived in 2006.

But Mr. Mkrtchian was optimistic today describing the current situation
as ‘a disaster" which is overcome sooner or later.

"Now we have more favorable conditions with the recovering world market
and with the ministry having designed a recovery plan of actions,"
he said.

The bulk of the rough supplies come mainly from Israel and Belgium,
explaining why the two countries are among Armenia’s leading trading
partners.
From: Baghdasarian