Restrictions on exports of Armenian-made goods to Russia could have a deflationary impact of up to 0.6% if new markets for these products cannot be found, according to Central Bank Governor Martin Galstyan.

Speaking at a press conference on June 16, Galstyan noted that, for example, a significant share of flowers produced in Armenia had been exported to Russia before the restrictions were introduced.

“The scenarios are numerous. If we are unable to change markets, then, according to our estimates, the deflationary impact could reach up to 0.6%. Our goods will remain in Armenia, supply will increase, and as a result, we expect that we may see some deflationary effects, for example, in vegetables, mineral water, certain alcoholic beverages, as well as some stone fruits. If it is possible to change markets, then this impact will be milder.”

According to Galstyan, maintaining the current situation could lead to a change of up to 2% in Armenia’s GDP.

Ahead of the parliamentary elections held on June 7, Russia imposed restrictions and bans on the import of numerous Armenian goods, which remain in effect today. The move prompted exporters to look for new markets, including in the EU. The EU has since announced support measures. European Commission President Ursula von der Leyen, following a phone call with Armenian Prime Minister Nikol Pashinyan, announced immediate financial assistance of more than €50 million, along with other support measures to facilitate trade, including measures to expand export opportunities for Armenian goods.

Russia has cited phytosanitary violations as the reason for the ban, which has been widely viewed by the EU as “economic coercion.”