Armenia’s external trade deficit reached a new record-high level last year, surpassing the $1 billion mark due to flat exports and a stagnant manufacturing sector, according to government statistics reported on Monday.
Official figures cited by the Regnum news agency show the country’s net imports soaring by almost 21 percent to $1.95 billion in the first eleven months of 2006. Armenian exports stood at just $895 million, 0.3 percent up from the same period in 2005.
The widening trade deficit reflects a 1.2 percent drop in industrial output that was registered by the Armenian government from January through November. By contrast, Armenia’s Gross Domestic Product as a whole was on track to grow by over 13 percent in 2006. The robust growth is largely driven by the booming construction and services sectors.
The government has repeatedly blamed the negative manufacturing trend on a continuing downturn in the global trade in refined diamonds, one of Armenia’s main export items. The Armenian diamond industry remained largely stagnant as a result.
Some local economists say the lack of growth in the already modest exports is the result of dramatic appreciation of the Armenian dram, which has gained as much as 40 percent in value against the U.S. dollar over the past three years. The Armenian Central Bank says the dram has been bolstered by a similarly steep rise in cash remittances sent home by hundreds of thousands of Armenians working abroad.
This explanation is dismissed by opposition politicians and economists critical of the government. They accuse the authorities of exchange rate manipulation, a charge strongly denied by the latter.
The official figures also show that the European Union remains Armenia’s number one trading partner, accounting for 34.4 percent of its $2.85 billion commercial exchange during the 11-month period. It rose by 13 percent in absolute terms.
The volume of Armenia’s trade with Russia, its closest ally, was again far more modest: $376.8 million or 13.2 percent of the total. The National Statistics Service also registered a 4 percent fall in U.S.-Armenian trade which totaled $152.6 million during the same period.