LOCAL PRODUCER MAY BE FORCED OUT OF DOMESTIC MARKET AS A RESULT OF DECLINE
IN EXPORTS AND GROWTH IN IMPORTS, EDUARD AGHAJANOV WARNS
YEREVAN, AUGUST 4, NOYAN TAPAN. The foreign trade deficit has increased
to about 35% of GDP in Armenia. No such index has ever been registered
in any other country. Economist Eduard Aghajanov stated this at the
August 4 press conference. In his words, this phenomenon is due to
the sharp depreciation of the US dollar in Armenia. "There is no
serious analytical center in Armenia to address problems caused by
the dollar’s depreciation and the Armenian dram’s appreciation,"
he noted. According to statistical data presented by E.
Aghajanov, in 2005, GDP grew by 13.9% and the foreign trade deficit
– by 28% in Armenia. In January-May 2006, GDP grew by 10.5% and the
foreign trade deficit – by 43.6%. That is, the deficit’s growth rate
exceeds fourfold that of GDP.
Aghajanov said that a record index of foreign trade deficit, amounting
to over 0.5 bln USD, was registered in the Armenian economy. In the
first five months of 2006, Armenia’s exports declined by 0.6%, while
imports grew by 19.9%. In the opinion of E. Aghajanov, this phenomenon
may have such a consequence for the Armenian economy as forcing the
national producer out of the domestic market. "To prevent the danger,
the authorities and the Central Bank of Armenia should conduct a
monetary and credit policy that will promote the business of the
national producer and exporter," he said. He noted that as a result
of all this, a considerable capital outflow occurs and many Armenian
businessmen establish production outside Armenia. In his words,
"the population is being persuaded that this is a natural phenomenon
for Armenia, as a lot of remittances come to Armenia." However, over
the past few months, 437 mln USD has flown into Armenia, while the
outflow made 950 mln USD. It means that an absolute dollar outflow
of 513 mln has occured. In foreign trade, a dollar outflow rather
than inflow has been registered, which should have been resulted in
the dram’s depreciation and the dollar’s appreciation. E. Aghajanov
said that a deficit of about 100 mln USD has been registered in
Armenia’s payment balance over the last few months. In 2005, the
Armenian dram appreciated by 16% but the payment deficit made 193
mln USD. In all cases, according to the independent economist, there
was a dollar outflow in Armenia, which should have brought about the
dollar’s appreciation and the Armenian dram’s depreciation. Thus,
in his opinion, the situation in Armenia is "higly illogical".