Global Insight
February 22, 2008

Surging Imports Continue to Undermine Armenian Trade Balance in
January

by Venla Sipila

According to the newest data from the Armenian National Statistical
Service, exports from the country amounted to some 18.7 billion dram
($61US million) in January, ARKA News reports. This level indicates
that exports increased by a mere 2.4% compared to the first month of
2007. At the same time, imports soared by 37.4% year-on-year (y/y),
reaching 84.6 billion dram for the month. These developments brought
the January trade deficit to 65.9 billion dram. Further, it was
reported that exports excluding trade on precious stones increased by
12.7% y/y, amounting to $52US.7 million, while imports shot up by
42.6% y/y totalling $267US million. Thus, the deficit without trade
in precious stones amounted to $214US.3 million in January.

Significance:Armenia’s trade deficit for 2007 as a whole came in at
over $2US billion, widening by a massive 73% compared with 2006 (see
Armenia: 25 January 2008: ), and this year has not started on a very
promising note regarding the possibility of a turnaround. Indeed, the
trade gap is expected to remain fairly wide over this year, as export
demand stays weak and the sector to an extent remains dependent on
the diamond trade. In addition, import growth is likely to remain
vigorous. However, import growth is likely to moderate somewhat,
together with overall growth and domestic demand. In any case, the
Armenian trade deficit should gradually moderate as percentage of GDP
over the coming years.