Main Reason For Decline In Armenia’s Jewelry Industry Due To Global

MAIN REASON OF DECLINE IN ARMENIA’S JEWELRY INDUSTRY DUE TO GLOBAL CRISIS

ARKA News Agency, Armenia
July 17 2007

YEREVAN. July 17. /ARKA/. The main reason of decline in the jewelry
industry of Armenia’s economy is the global crisis. Gagik Lazarian,
head of the department for precious stones and jewelry, run by the
ministry of trade and economic development, reported Tuesday, Armenia,
as well as other countries involved in diamond cutting were the first
to experience that impact.

"And, despite the worldwide tendencies of overcoming the crisis,
its consequences will be felt for a long time. Now for Armenia a
pressing issue is to overcome these consequences," he said.

According to Lazarian, in January-June 2007, jewelry output totaled
AMD 24,633bln ($72.7mln) compared to AMD 47,463mln ($140.2mln) in
the corresponding period of 2006.

"Thus, a 48% decline is being observed in the industry’s production,"
he reported.

Lazarian also said the sales of jewelry output totaled AMD 23,835mln
($70.4mln) in the accounting period, and export – AMD 23,579bln
($69.6mln) compared to AMD 47,724bln ($140.9mln) and AMD 46,204bln
($136.5mln) respectively in the corresponding period of the previous
year.

Touching upon the reasons of that decline, Lazarian pointed out
that a specific increase in expenses is connected with decrease
in export opportunities, which in its turn is due to the national
currency revaluation.

"However, I tend to believe that this reason is not primary, and the
country has sufficient resources to overcome it," he said and added
that a rather serious impact on the development of that sector in
Armenia is made by China’s expansion, which has become a competitive
country with higher efficiency and quality of products.

Among other reasons of the decline, Lazarian pointed to the
interruption of diamond raw materials supply to Armenia from Russia
beginning from 2006.

"Manufacturers of the diamond cutting industry aim to sell products
in their countries provided that favorable conditions for business
are created. That is why, the problem of raw materials is acute in
the countries that do not have it," he said.

According to Lazarian, the readiness of Armenian companies and
enterprises for enduring the competition in world markets should play
a big role in development of that industry.

"Because Armenian companies are not prepared from the viewpoint of
technological and financial management, they do not withstand the
world competition," he reported.

At the same time, Lazarian added that under the conditions of a touch
competition, additional steps should be taken, such as increasing
quality of products and reequipping enterprises.

According to the department, jewelry products in Armenia in 2006
totaled AMD 88,048 ($244.6mln) compared to AMD 112,194bln ($311.7mln)
in 2005. The sales totaled AMD 88,993bln ($247.2mln) compared to
AMD 111,293bln ($309.2mln) in 2005. Export in the accounting period
totaled AMD 87,076bln (about $242mln) compared to AMD 109,665bln
($304.7mln) in 2005.

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