By Emil Danielyan
Armenia’s trade deficit reached a new record high in 2007 amid soaring imports and a far more modest growth in exports, according to the latest macroeconomic data released by the National Statistical Service (NSS).
The official statistics show the deficit jumping by more than 70 percent year-on-year to $1.8 billion, equivalent to one fifth of the country’s GDP, in the first eleven months of 2007.
A 47 percent surge in net imports, which totaled $2.87 billion, was instrumental in the huge gap. Armenian exports rose only by 21 percent during this period, even if they reached a record-high level of about $1.1 billion.
Armenia has been able to import a lot more goods and commodities than export them since the early 1990s thanks to large-scale cash remittances from hundreds of thousands of its citizens working abroad. According to Central Bank projections, the total amount of such remittances processed by Armenian commercial banks will hit an all-time high of $1.35 billion this year. A comparable amount of cash is thought to enter the country through non-bank transfer systems.
The external transfers have not only covered the massive trade and current-account deficits but appear to have been the key factor behind recent years’ dramatic appreciation of the Armenian dram. They have also been essential for the country’s robust economic growth.
The NSS figures also show that the European Union remain Armenia’s single largest trading partner, accounting for over 38 percent of its external commercial exchange in January-November 2007. Armenian imports from and exports to EU member states stood at nearly $1 billion and $500 million respectively.
Armenia’s trade with other members of the Commonwealth of Independent States soared by 60 percent to nearly $1.3 billion in this period, with Russia accounting for nearly half of the turnover. According to the NSS, the volume of Russian-Armenian was up by 68 percent despite the continuing Russian transport blockade of Georgia, Armenia’s main commercial conduit to the outside world.