TRADE GAP REMAINS DEEP IN ARMENIA DURING APRIL
by Venla Sipila

World Markets Research Center
Global Insight
June 3, 2008

Newest data bring no relief for concerns over wide Armenian external
imbalances. Indeed, according to data from the country’s National
Statistical Service and as reported by ARMNIFO, exports increased
by 4.4% year-on-year (y/y) over January-April, totalling $337US
million. Detailed data further show that, specifically, exports of
precious and semiprecious stones fell by 26.7% y/y to stand at $51US.4
million. At the same time imports soared by 37.2% y/y, reaching
$1US.19 billion, and bringing the trade deficit for the first four
months of the year to $857US million, which corresponds to some 38%
of the estimated GDP for the period. As first-quarter export growth
was earlier reported at 1.5% y/y (seeArmenia: 22 April 2008:), the
latest data suggest some speeding up of export gains.

On the other hand, coming after an increase of imports at 31.5% y/y
seen in the first quarter, they also point to further acceleration
in import growth in April in annual terms. However, month-on-month
(m/m) comparison provides somewhat moire balanced reading: exports
increased by 12.7% m/m in April, whereas imports rose by 13.5%
m/m. Finally, geographical trade data show that Armenia’s trade
deficit was widened by some 50% y/y with both the European Union (EU)
countries and economies of the Commonwealth of Independent States
(CIS), the respective gaps standing at $208US.1 million and $295US
million in January-April.

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. The
trade gap is expected to stay fairly wide over this year, as export
potential to an extent remains dependent on the diamond trade. At the
same time, domestic demand seems to be holding up more persistently
than previously thought, and this is further reflected in persistently
very high import growth. In addition, the strength of international
commodity prices puts upwards pressure on import prices.