ARMENIAN TRADE DEFICIT HITS NEW HIGH
Trend News Agency
Jan 8 2009
Azerbaijan
Armenia’s massive trade deficit reached a new record high in 2008 amid
soaring imports and sliding exports that reflected the growing impact
of the global financial crisis on its economy, reported Armenialiberty.
According to the National Statistical Service (NSS), the deficit
jumped by 29 percent and all but passed the $3 billion mark in the
first eleven months of the year. The full-year figure for 2007 reported
by the NSS was $2.12 billion.
The trade imbalance has worsened steadily in recent years not least
because of sluggish exports that have sharply contrasted with the
country’s robust economic growth. The official statistics show Armenian
exports falling by 4.5 percent year-on-year to just over $1 billion
in January-November 2008.
Local mining and diamond-processing industries were primarily
responsible for the drop. The metallurgy sector has been hit hard
by a sharp fall in international prices of non-ferrous metals,
Armenia’s number one export item, resulting from the global economic
recession. Hundreds of employees of Armenian mining companies have
been laid off or sent on indefinite leave since last October.
By contrast, Armenia’s net imports jumped by 40 percent to almost $4
billion in January-November 2008. In particular, the NSS registered a
54 percent surge in imports of capital goods, cars and other transport
equipment that accounted for just over a quarter of the total.
Natural gas and other minerals remained the country’s single largest
import item in this period. Import expenditure on them rose by 33
percent to $607.8 million. Armenia also imported $302 million worth
of prepared foodstuffs in January-November 2008.
Armenia has long been able to run large trade and current account
deficits thanks to multimillion-dollar cash remittances from hundreds
of thousands of its citizens working abroad. The remittances have also
contributed to the country’s overall strong macroeconomic performance
since the mid-1990s.
The Armenian government and independent economists say the global
crisis will likely reduce the vital cash inflows in 2009. The
government intends to offset that reduction with increased spending
on infrastructure projects and more loans to small and medium-sized
businesses. It hopes to obtain large-scale financial assistance from
the World Bank and other lending institutions for that purpose.