168: The construction bubble and the re-export myth. Pashinyan’s economic “miracle”

While before the elections, the political authorities are busy brainwashing the citizens, trying to create moods by making announcements about the rapid developments and growth of the economy, processes are taking place in the economy that do not fit into the optimism of the authorities. Despite the growth of economic activity, including the growth of industry, exports from Armenia have decreased again. It decreased after last year’s decrease.

In January last year, a record drop in exports was recorded. was almost halved. On top of that, 13.5 percent less goods were exported from Armenia in January of this year.

Only 176 billion drams or about 464 million dollars were exported, including re-exports.

Re-exports, as in the previous few years, continue to make up quite a large weight in Armenia’s exports. Almost half of exports last year were re-exports. This year, re-exports are not small, but judging by the recorded declines, they continue to decrease.

In contrast to re-exports, it is worrying that ready-made food exports have decreased. This is the main export sector that is directly related to the economy of Armenia. There are mostly no or very few re-exports here. But here and there, a decline has been recorded here as well. The export of ready-made food was reduced by 16 percent at the beginning of this year.

The export of precious metals and stones has decreased sharply. Last year it was 176 million dollars, this year it was 96 million. It decreased by 80 million or more than 45 percent.

Decreased due to reduced known re-exports of gold.

Like gold, the re-export of a number of other products, particularly equipment and machinery, continues to play a crucial role in Armenia’s economy and export indicators. On indicators, but not on the economy.

The import has also decreased, and again, after last year’s decrease. Last year the decrease was almost 34 percent, this year it was more than 11 percent.

Domestic trade turnover has hardly increased. Instead, economic activity was primarily driven by construction, where almost 19 percent growth was recorded. Although the income tax refund program was withdrawn from Yerevan, construction continues to grow at a high rate. This is not because the construction is moving forward with inertia, but because the benefit of the return of income tax was only theoretically removed from Yerevan. There are many unfinished constructions that still retain that privilege. As a result of this, the growth of construction takes place. When the construction of the buildings built with previously issued permits in Yerevan will end, the “golden” era of construction will also end. It will be at the end of this year or at the beginning of next year.

For now, it is growing dynamically, although there is intrigue in this growth. In the construction industry, official statistics showed an increase of almost 19 percent at the beginning of the year, when in that same period, far fewer people were employed in construction. One can hardly think that this discrepancy was caused by the increase in productivity.

Something is wrong, has the shadow of the labor market grown, or have the official statistics tried too hard to present high growth?

After a fairly deep decline last year, the industry picked up early this year. At first glance, a tangible increase was registered: 10.6 percent. Although the decline of the previous year was almost the same, 10.4 percent. But let’s leave aside last year’s decline. The growth registered in the industry at the beginning of the year is mainly at the expense of mining and electricity production. More than 25 percent increase in production volume was recorded in the mining industry. And again, after last year’s decline.

Electricity production also increased by 17 percent. But as strange as it is, the growth of the manufacturing industry is very modest, barely 4.3 percent. That’s after the more than 16 percent decline of last year.

The year began with a decline in tobacco production, which had been growing at a fairly high rate in recent years. There is a slight increase in the production of beverages after a deep decline in the previous year.

At the beginning of the previous year, the production of beverages decreased by more than 25 percent. It has grown by 3.3 percent this year, but it still has a long way to go to recover.

The impact of the so-called Russian gold processing has not yet begun to manifest itself in the processing industry this year. There is a slight uptick in base metal production, but it is not the uptick we see in Russian gold movements. When Russian gold begins to circulate in the processing industry, we have significant increases in indicators, as we had at the end of last year. Imagine, in December of last year the production of basic metals, which included Russian gold, reached 173 billion drams, in January of this year it was only 26 billion drams. 6-7 times less when there is no Russian gold.

Apart from processing of Russian gold, there is also the production of jewelry in the processing industry, where a decline in production volume was recorded this year as well. Of course, it does not reach the decline of the previous year. Last year the decline was 37 percent, this year it was 1.4 percent.

There are no significant changes in both the industry as a whole and the processing industry. The effect of last year’s declines is particularly noticeable. After those declines, some increases are registered, the authorities seem to have developments.

The other sector, which has become the engine of economic activity in Armenia, is services, which is known, first of all, for the growth of the financial sector and entertainment services. Although there has been a significant slowdown in the growth rate in the services sector, compared to the previous year.

HAKOB KOCHARYAN

—