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.