Monday, July 25 2022 17:06
Karine Melikyan

Double-digit growth of economic activity in Armenia is accompanied by  high growth rates of imports and exports

Double-digit growth of economic activity in Armenia is accompanied by  high growth rates of imports and exports

ArmInfo. In Armenia, economic activity in H1 2022 increased by 11.8% per annum (against 5% growth in H1 2021 and 6.5% growth in H1 2019), which is accompanied by high growth rates of imports and exports. In June of this year, by June  2021, economic activity increased by 18.5% (against 8% growth a year  earlier and 3.4% growth in 2019), while in June 2021 alone  accelerating growth to 17% from 6.1% in May (against a similar growth  acceleration in June 2021 from 2% to 12%, and a slowdown from 8.4% to  8.2% in June 2019). This is evidenced by the preliminary data of the  RA Statistical Committee. 

The growth of economic activity in H1 2022 was largely determined by  the service sector - by 26.9%, to a slightly lesser extent by the  energy complex - by 14.8%, the construction sector - by 12.7% and the  trade sector - by 10.7%, in parallel with this, there was an  acceleration in the growth of the industrial sector up to 5.8%, and a  subsidence of the volume of the agricultural sector by 5.5%. A year  earlier, in H1 2021, all these areas, and even the agricultural  sector, showed more restrained growth: the construction sector -  10.8%, the trade sector - 8%, the agricultural sector - 6.8%, the  service sector - 2.7%, the industrial sector - 2.1% and energy  complex - 0.5%.

The industrial products price index increased in H1 2022 compared to  the same period in 2021 by 7.8%, in June 2022 compared to June 2021  it decreased by 1.2%, and  in June 2022 alone it lingered in the  decline with an imperceptible slowdown to 2. 9% from May 3.1%. A year  earlier, positive dynamics was recorded in similar periods: the price  index of industrial products increased in January-June 2021 compared  to the same period in 2020 by 10%, in June 2021 by June 2020 - by  15.5%, and in June 2020 alone growth accelerated from 1% to 3.1%.

On a monthly terms (for June 2022), the construction sector and the  industrial sector gave a decisive impetus to the growth of economic  activity - by 20.1% and 17.1%, respectively, while a year earlier in  June 2021 the industrial sector was in a 0.9% decline, while the  construction sector showed slightly higher growth - by 21.9%. In  terms of growth rates they are followed by: the trade sector - 12.8%,  the service sector - 8%, the energy complex - 6.4%, at the same time  the trade sector and the service sector showed a modest increase a  year earlier in June 2021 - by 7.2% and 3.9 respectively, while the  energy complex was then in decline by 8.2%.

On a y-o-y terms (June 2022 to June 2021), an increase in economic  activity was observed in all industries, and even the energy complex  recovered from the recession to double-digit growth. Thus, the  service sector increased its volumes by 35.5%, the energy complex -  by 25.4%, the industrial sector accelerated the growth of volumes to  19%, the trade sector increased its turnover by 18.2%, and the  construction sector increased its volumes by 16.2%. A year earlier,  in June 2021 by June 2020, except for the energy complex, which  slowed its down volumes to 8%, growth in all industries was observed,  however, the rates were relatively modest: the service sector - 12%,  the trade sector - 10.3%, the industrial sector and construction -  1.3% each.  According to statistical data in January-June 2022, the  leadership in absolute terms is held by the trading sector with a  volume of 1.8 trillion drams ($3.8 billion). The second position is  held by the industrial sector - 1.2 trillion drams ($2.5 billion),  the third place is occupied by the service sector - 1.1 trillion  drams ($2.4 billion). The fourth place is traditionally occupied by  agriculture - 291.9 billion drams ($623.3 million), and the fifth  place is held by construction sector - 149.03 billion drams ($318.3  million). The volume of electricity generation in January-June 2022  amounted to 4387.3 million kWh, of which 641.9 million kWh in June  alone.

In the consumer market of Armenia, inflation accelerated in H1 2022  to 8.1%, amounting to 0.3% in June alone, and it had multifold  increase of 10.3% compared to June 2021, which was also observed last  year, but at relatively low pace: in H1 2021, inflation was 5.7%,   there was a deflation of 0.8% in June alone and compared to June  2020, inflationary 6.5% was recorded.

At the same time, the foreign trade turnover of Armenia in  January-June 2022 increased sharply by 44% per annum, reaching 2.4  trillion drams ($5.2 billion). In its structure, high growth was  observed both in imports and exports. In particular, the volume of  exports increased y-o-y by 36.3% to 869 billion drams ($1.9 billion),  and imports - by 48.7% to 1.5 trillion drams ($3.3 billion). In June  2022 alone, foreign trade turnover increased by 20.2% due to an  increase in exports by 38.2% with a more modest 10.4% increase in  imports, and compared to June 2022, the increase in foreign trade  turnover by 71% was more provoked by an increase in imports by 73.1%  and, to a slightly lesser extent, by an increase in exports by 68.1%.  A year earlier, in January-June 2021, foreign trade turnover  increased by 13.4% per annum due to the growth of exports by 23.3%  and imports by 7.9%, and the June growth of foreign trade turnover by  1.9% was provoked by the upward dynamics of exports by 12.2% with a  decline in imports by 4.5%, compared with June 2020, the 20.1%  increase in foreign trade turnover is caused by the 33% increase in  exports rather than the 12.1% increase in imports.

The average settlement rate of the dram in June 2022 was 422.69  AMD/$1, and in January-June 2022 - 468.24 AMD/$1, against 513.09  AMD/$1 in June 2021 and 522.08 AMD/$1 in January- June 2021.

It should be noted that the World Bank revised its forecast for 2022  in early June, improving the expected GDP growth rate in Armenia from  the previous 1.2% to the updated 3.5%. In the middle of June of this  year, the Central Bank of Armenia also revised its forecast for 2022,  indicating a more optimistic GDP growth of 4.9% (against the  previously forecasted 1.6%). At the end of June, the International  Monetary Fund also improved its 2022 forecast for Armenia's GDP  growth from the previous 1.5% to an updated 5%.  According to actual  statistics, Armenia's GDP in 2021 reached a 5.7% growth (from a 7.2%  decline in 2020), slightly lower than pre-Covid figures of 7.6%  growth in 2019. 

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