ARMENIAN TRADE DEFICIT CONTINUES GROWTH DURING H1
by Diego Iscaro

World Markets Research Centre
Global Insight
August 1, 2008

Latest data show that Armenian external imbalances continued to
deteriorate during the fist six months of 2008. Indeed, according
to data from the country’s National Statistical Service reported by
ARMNIFO, the trade deficit stood at $1US.387 billion during the fist
half of 2008, as exports fell by 0.8% year-on-year (y/y) to $520US
million and the total value of imports increased by 40.3% y/y to
$1US.908 billion. Geographical trade data show that Armenia’s trade
deficit with countries from the European Union (EU) was widened by
57.0% y/y to $331US.0 million, while the deficit with other countries
of the Commonwealth of Independent States (CIS) rose by 52.5% y/y to
$433US.0 million. Furthermore, detailed data revealed that exports of
precious and semiprecious stones waned by 23.3% y/y to $82US.0 million,
while exports of rough ore rose by 25.9% y/y to $85US.0 million.

Significance:Strong domestic demand is fuelling import growth, while
export potential remains mainly dependent on the diamond trade. Global
Insight believes that these factors are likely to remain in place
during the rest of 2008. Indeed, the value of imports is set to be
boosted by a combination of robust demand for investment goods and high
international oil prices. Nevertheless, strong output growth should
result in a waning of the deficit-to-GDP ratio in 2008 as a whole.