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Economist: Armenia exported $57 million worth gold powder to Turkey in three months

Armenia has seen an unprecedented decline in the foreign currency exchange rates in 2022. Meanwhile, a surge in Armenian exports has been recorded. Panorama.am has spoken to economist Aghasi Tavadyan, an associate professor at the Armenian State University of Economics and the Tvyal.com platform manager, over the reasons behind this trend.

Aghasi Tavadyan: Armenia is expected to see a 60% growth in both exports and imports later this year compared to the previous years. It’s mostly attributed to the increase in exports to the Eurasian Economic Union and, in particular, Russia. From the year the EEU was established to 2021, exports from Armenia almost tripled, but this year is unprecedented because by the end of the year it is projected that exports will have been 2.2-2.6 times higher than last year. Armenian exports to the EEU states totaled to nearly $1 billion in 2021, this year it is expected to stand at $2.2-$2.6 billion.

Agricultural exports from Armenia have also increased, but the largest growth has been recorded in exports of machinery, equipment and chemicals, which have grown by 3-10 times. That is, exports to Russia have increased more than 10 times compared to the past years.

Understandably, we don’t have sufficient capacity to produce machinery. Then what is the problem? Since Russia has been hit by sanctions and cannot import certain goods from Europe and other countries, and because of sanctions some entrepreneurs are leaving Russia and settling in Armenia, some firms relocated in Armenia import goods from other countries and sends them to Russia. The rate of this flow has also increased, but that does not mean that we have not recorded an increase in exports as a whole. In other words, if you take away the growth I talked about from the total export, there is nevertheless a big growth.

Panorama.am: Which export industries mostly saw problems?

Aghasi Tavadyan: There is a problem with exports in light industry, namely textiles and knitwear, as their exports to Russia and the European Union have fallen. Until 2013 the figure for exports in light industry was almost zero, the highest figure was recorded in 2018, when about 8.5% of the total exports made up textiles, knitwear and shoes. This year, exports of Armenian goods to Europe understandably dropped. At the beginning of the year, contracts were signed based on 560 drams per euro, while currently one euro is traded at 360 drams.

There are also certain problems in terms of mining, because the global metal prices are determined by the dollar exchange rate, which has fallen.

Panorama.am: Which exports have declined?

Aghasi Tavadyan: The study of the inflation rate shows that except for eggs and apples, prices of which went down compared to the previous year, prices for other agricultural goods have increased this year. Cabbage prices have tripled, prices of some vegetables have also increased by 1.5-2 times, which has been caused by the drought and an increase in overall demand. Armenian agricultural products are mainly exported to Russia. When it comes to vegetables and fruits, their export rates have not dropped. On the contrary, they have grown. Decline is observed in light industry and tobacco exports, but recently an increase in exports to Russia and the East has been observed.

Panorama.am: What can you say about Turkey amid the ongoing regional political developments?

Aghasi Tavadyan: If we look from 2020 to date, imports of products from Turkey dropped by 40% over the past two years. More precisely, a decline in imports has been recorded not of Turkish goods, but of goods imported from Turkey. Imports of Turkish-made goods only fell by 2%. That is, people imported Turkish products not from Turkey but through other countries.

Armenian exports to Turkey are almost zero, but, remarkably, in the previous 6, 7 and 8 months we recorded an unprecedented increase in exports to Turkey. In three months, exports were 2-3 times higher than imports. What did we export? We exported schlich gold. We exported about $57 million worth of raw gold powder to Turkey in three months, which makes up 800 kilograms. This trend is on hold currently, it was just a temporary export case, which is of interest and needs to be studied in more depth.

Interview by A. Vardanyan


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