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  • Nerses Yeritsian: Armenia Is Vulnerable To Small Extent To External

    NERSES YERITSIAN: ARMENIA IS VULNERABLE TO SMALL EXTENT TO EXTERNAL ECONOMIC SHOCKS

    Noyan Tapan
    Jan 24, 2008

    YEREVAN, JANUARY 24, NOYAN TAPAN. The possible economic recession
    in the U.S. may result in a decline of incomes and, consequently,
    in remittances from this country to Armenia which may reduce the
    pressure of the Armenian dram's appreciation, the RA minister of
    trade and economic development Nerses Yeritsian said at the January
    23 press conference.

    In his words, by a less likely scenario: if the correction of the
    dollar's exchange rate is done at the expence of the balance of
    payments in the U.S (which is less likely because the U.S. cannot
    completely stop external financing of the country), the dollar may
    depreciate more rapidly. "In this case we must be able to correct
    our monetary and credit policy in the best possible way," said the
    minister, in whose opinion the latter version is less favorable
    for Armenia.

    According to him, the real US dollar - dram exchange rate did not
    rise in 2007 on 2006 for Armenia's main trade partners.

    N. Yeritsian said that the high prices of crude ores exported from
    Armenia are conditioned by demand of rapidly developing countries with
    big economies rather than by demand of the U.S. At the same time,
    the minister forecast that a fall in international prices of copper
    and molybdenum is unlikely in the medium term as these raw materials
    are used, in particular, in high-tech sectors of China and India to
    which the investment inflow will continue.

    The minister added that the import-export ratio has declined in the
    past ten years. It is typical of countries registering an economic
    growth and not having fuel resources. In such countries imports are
    considerable at the economic cycle's growth stage. In his words,
    goods that improve the quality of life and ensure technology transfer
    prevail in Armenia's imports, whereas the share of imported foodstuffs
    is declining. The share of finished technological and consumer goods,
    including processed agricultural products, is increasing in Armenia's
    exports.

    The minister stated that the ratio of the foreign trade's negative
    balance to Armenian GDP is not high (two times lower than the
    respective index of Georgia). Besides, Armenia's foreign reserves
    are sufficient, and external economic shocks will not affect the
    macroeconomic stability of Armenia.
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