The Messenger, Georgia
Aug. 11, 2006

Armenian production woes should be a lesson to Georgia
By M. Alkhazashvili

Armenian economist Edward Agajanov argues that the artificial
strengthening of the Armenian national currency, the dram, is harming
local production.

In the last three years, the dram has risen 40 percent against the
dollar, and 10 percent in just the first half of 2006. This has
created problems for Armenian manufacturers, and the trade deficit is
increasing. In the first three months of 2006, the trade deficit
reached USD 500 million. Economic growth is lagging behind the trade
deficit, and Agajanov considers the Armenian economy a poor second in
comparison to the growth of neighbouring (but not neighbourly)
Azerbaijan.

Agajanov states that across the world, including in economic giants
and giants-to-be such as the USA, China, and Russia, domestic
production is encouraged by keeping local currency rates low-a lesson
Armenia seems not to have observed. Perhaps Georgia will have
something to learn from Armenia’s example.