Thursday, July 6 2023 15:36

ArmInfo. 

In Armenia, the growth of  economic activity accelerated in January-May 2023 to 12.5% per annum  (from 10.2% a year earlier), which is accompanied by high growth  rates of exports and imports. In May of this year, by May 2022,  economic activity accelerated growth to 13.7% (from 13% a year  earlier), while increasing by 7.7% in May 2023 alone (against 6.1%  growth in May 2022 and 3.4% growth in April 2023). This is evidenced  by the final data of the RA Statistical Committee.

According to statistical data, the growth of economic activity in  January-May 2023 was largely determined by the trade sector - 24.5%,  the service sector - 19.9% and the construction sector - 16.7%, and  to a lesser extent - the industrial sector - 3%, and the energy  complex showed a decline of 3.1%. A year earlier, in January-May  2022, the growth drivers were the service sector - 24.9%, the energy  complex - 13.1% and the construction sector - 11.4%, and more  restrained growth was shown by the trade sector - by 8.9% and the  industrial sector - by 2.7%.

On y-o-y terms (May 2023 to May 2022), an increase in economic  activity was observed in all sectors, except for the energy complex,  which worsened the dynamics from 8.2% growth to a 2% decline. Thus,  the highest growth was demonstrated by the trade sector - with an  acceleration of rates up to 28.6% (from 12.4% a year earlier),  followed by the construction sector - with an acceleration of rates  from 18.1% to 18.4%, the services sector - from deceleration from  30.2% to 12.3%, and the industrial sector - with an acceleration of  rates from 2% to 5.3%.

On a monthly term (for May 2023), the construction sector gave a  decisive impetus to the growth of economic activity with an increase  in volume by 19.7% (against 21% growth in May 2022), followed by the  industrial sector - by 9.9% (against growth by 3.2% in May 2022),  trade - by 9.6% (against growth by 9.8% in May 2022) and the service  sector - by 1.1% (against growth by 6.3% in May 2022 ). The energy  complex lingered in the decline, with a slowdown to 5.1% from 10.9% a  year earlier.

The price index of industrial products decreased in January-May 2023  compared to the same period in 2022 by 1.6%, in May 2023 compared to  May 2022 - by 3.6%, and in May 2022 - by 3.5%. A year earlier, in  similar periods, an upward trend was recorded, with the exception of  May: the price index of industrial products increased in January-May  2022 compared to the same period in 2021 by 9.6%, in May 2022  compared to May 2021 - by 5%, and in May 2022 alone it  decreased by   3.1%.  The consumer price index increased in January-May 2023  compared to the same period in 2022 by 5.2%, in May 2023 compared to  May 2022 - by 1.3%, and in May 2023alone it decreased by 1.8%, while  as a year earlier, higher inflation was recorded in similar periods:  7.7% per annum (in January-May), 9% per annum (in May) and 0.1% (per  month).

According to statistical data of January-May 2023, the absolute  leader is the commercial sector with a volume of over 1.8 trillion  drams ($4.7 billion). The service sector has returned to the second  place - 1.2 trillion drams ($3 billion), displacing the industrial  sector to the third place - 952.6 billion drams ($2.4 billion).  Agriculture was always in fourth place, but due to lack of data, this  place was taken by the construction sector- 131.05 billion drams  ($335.7 million). The volume of electricity generation in January-  May 2023 amounted to 3630.3 million kWh, of which 590.9 million kWh  only in May alone.

Against this background, the foreign trade turnover of Armenia in  January-May 2023 amounted to 2.9 trillion drams ($7.3 billion) with a  y-o-y increase of 86.9%. In its structure, the volume of exports in  y-o-y terms increased by 93.3% to 1.05 trillion drams ($2.7 billion),  and imports - by 83.3% to 1.8 trillion drams ($4.6 billion). In May  2023 alone, foreign trade turnover increased by only 2.3% due to an  increase in imports by 4.8%, with a decline in exports by 2.3%, and  compared to May 2022, an increase in foreign trade turnover by 50.5%  almost equally was provoked by an increase in imports by 52.1% and  exports by 47.6%. A year earlier, in January-May 2022, foreign trade  turnover increased by 36.6% per annum due to the growth of exports by  27.5% and imports by 42.2%, and the May growth of foreign trade  turnover by 23.9% was provoked by the upward dynamics of exports by  19.9% with an increase in imports by 26.3%, compared with May 2021,  an increase in foreign trade turnover by 45.5% was largely provoked  by an increase in imports by 52.8% and, to a slightly lesser extent,  by an increase in exports by 33.7 %.

In its June forecast report, the Central Bank of Armenia forecasts a  sharp slowdown in export and import growth for 2023, to 18.7% and  22.1%, respectively, from the actual 54.4% and 33.8% in 2022, with  entry in 2024 in a decline in exports by 2.9% and imports by 4.5%. At  the same time, the Central Bank of the Republic of Armenia slightly  improved the forecast GDP growth for 2023 from the previous 5.8% to  the updated 6.9% (against the actual 12.6% growth in 2022), with a  slowdown in 2024 to 5.5%. Then in June, head of the Central Bank,  Martin Galstyan, explained a certain decrease in the volume of  exports and imports during the year by the fact that this would  happen against the backdrop of tougher requirements for the sale of  products of the partner country in the country of delivery, with a  ban on re-export. "We see that international firms of partner  countries are increasingly demanding confirmation that their products  will be sold under the jurisdiction of the economy of our country and  will not be re-exported. From this point of view, I think that as far  as control mechanisms increase, we will see re-export transactions  will decrease both in volume and quantity," Galstyan explained,  noting that the volumes of exports and imports in the direction of  Armenia will decrease accordingly.

Meanwhile, the Ministry of Economy of the Republic of Armenia does  not expect a decrease in exports and imports in 2023 due to a  possible reduction in re-export transactions. Thus, on June 16,  Deputy Minister of Economy Rafael Gevorgyan stated that a slowdown in  growth rates is possible at the end of the year, but a decrease in  supplies is not expected. In this regard, Gevorgyan stressed that  such forecasts are due to the already available data on exports and  imports (for less than 6 months), where there is a noticeable  increase in supplies. In addition, the Deputy Minister drew attention  to the fact that re-export includes those goods that are allowed to  be exported. "Re-export, of course, has a certain impact on export  volumes, but this is in no way connected with the sanctioned  environment," he noted.

It should be noted that the average settlement rate of the dram in  May 2023 was 386.56 AMD/$1, and in January-May 2023 - 390.41 AMD/$1,  against 456.54 AMD/$1 in May 2022 and 477.34 AMD/$1 in January-May  2022.