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Trade Gap Remains Deep In Armenia During April

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  • Trade Gap Remains Deep In Armenia During April

    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.
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