The Armenian government has effectively committed itself to helping to ensure a steady and rapid increase in exports that would eliminate Armenia’s huge trade deficit within the next five years.
Senior officials at the Armenian Ministry for Economic Development and Reforms told Prime Minister Karen Karapetian at the weekend that this will be the main engine of faster economic growth envisaged by his government.
“You are saying that our exports should exceed imports by 2022,” a government statement quoted Karapetian as saying at a meeting with Economic Development Minister Suren Karayan and other top ministry officials. “You are making a very good assertion.”
“But can we deliver on it? Do you know exports of which goods we are going to increase and which imports we are going to curtail?” he asked before receiving what the statement called a “positive answer.”
According to the National Statistical Service (NSS), Armenian exports rose by 20 percent to almost $1.8 billion last year. But they still paled in comparison with imports totaling $3.3 billion. Armenia has had even bigger trade deficits in the past, even when its economy grew at double digit rates until the 2008-2009 global financial crisis.
Karayan and his senior staffers estimated that the deficit will be more than nullified if the exports grow by an average of 20 percent annually for five consecutive years. They forecast that Armenia’s export revenue will approach the $2 billion mark this year and rise by another $450 million in 2018. This will translate into 15,000 new jobs, they added.
The ministry officials also said Russia and other members of the Russian-led Eurasian Economic Union (EEU) will absorb most of the extra exports anticipated by them. Annual Armenian exports to these ex-Soviet countries will double to nearly $800 million within three years, they said, according to the government statement.
The NSS data shows that Armenia exported $371 million worth of goods to Russia last year, up by over 50 percent from 2015. Fresh agricultural products, prepared foodstuffs, textiles and alcoholic beverage accounted for the bulk of them.
Despite this sharp rise, the European Union remained Armenia’s number one export market in 2016, buying about $480 million worth of Armenian goods and commodities. The South Caucasus state mainly exports copper, molybdenum and non-ferrous ore concentrates to EU countries and Germany in particular.
The ambitious export targets set by the Ministry for Economic Development and Reforms are most probably tied to large-scale investments which Karapetian has pledged to attract into the sluggish domestic economy. He has specifically promised $3.2 billion in funding for around 350 nationwide investment projects to be implemented in the coming years. More than $800 million of that sum is supposed to be invested this year.
The premier and other government officials have yet to specify all sources of the promised investments. Karayan said on April 13 that an investment fund set up recently by wealthy Russian businesspeople of Armenian descent will spend $300 million on equity purchases in or low-interest loans to local firms in 2017.
Karapetian told the ministry officials that the government will also strive to stimulate greater exports through improved tax administration. He also discussed with them stated government efforts to improve the country’s broader business environment.
The former business executive has repeatedly pledged to create “equal conditions” for all entrepreneurs since he was named prime minister in September. Opposition politicians dismiss his ambitious reform agenda, however. They say, in particular, that wealthy businesspeople close to the government continue to enjoy a monopoly on lucrative imports of fuel and basic foodstuffs.
A senior official from the International Monetary Fund insisted in Yerevan on April 12 that Karapetian’s cabinet is committed to implementing key reforms needed for speeding up economic growth.
Economic growth in Armenia all but ground to a halt last year amid a continuing recession in Russia. The IMF expects it to accelerate to around 3 percent in 2017.