Thursday, April 11, 2013

Armenia's stubborn trade gap

Armenia's trade gap widened over time, exploding in the years of 2006-2008. While imports and exports shrank in the aftermath of the global financial crisis, a pattern consistent with the Great Trade Collapse, both roughly converged in 2012 to their pre-crisis levels. Yet, the gap remains stubbornly high and accounts for some 28 percent of GDP.
How much of this is explained by the uncompetitiveness of the country (high wage and effective exchange rates), or by the local appetite for foreign made goods? Is import substitution a promising route for growth, and can the country compete with the emerging economies?

Exports and imports in USD millions

In 2012, goods and services from the EU accounted for 27 percent of imports, Russia for 25, China for 10, and the BRICs for a combined 38 percent.


Sedrak Mkrtchyan said...

Well the gap between import and export decreased last years, as I see. Import level reaches the pre-crisis period, whil export level is much higher. Am I right?

For deep understanding of the situation analysis of what Armenia is able to export needs to be analyzed. The tiny economy can hardly compete foreign cheap goods and services even in Armenian market let alone exporting them.

David said...

The big picture shows large and growing trade gap over time (with peak in absolute value in 2008).
The sustainability of this pattern, as well as the competitiveness of domestic industry (your point) are critical questions.