Wednesday, November 26 2014

 Local producers in Armenia face problems as purchasing power in Russia falls and the Russian ruble depreciates, Arsen Ghazaryan, Head of the Union of Industrialists and Entrepreneurs (Employers) of Armenia, said at the discussions on Armenia's accession to the Eurasian Economic Union (EEU) on 26 November.    

He said the local producers face difficulties when making contracts with Russian companies and fulfilling these contracts. Meanwhile, Ghazaryan said, 30% of the local production is sold in the Russian market.  Export of the agricultural produce to Russia accounts around 80% of total export of these products from Armenia. He said exports from Armenia to Russia is supposed to grow with the country's accession to the Eurasian Economic Union (EEU), but the above issue may turn into a serious problem.

Ghazaryan said most of the contracts are implemented in US dollars, but there are documents that are implemented in terms on the Russian rubles. In this light, he said, it is extremely important to assess what is happening in the Russian market, because the problems there curtailed export of Armenian goods in 2014.   "The problem is not in low demand for local products, but in uncertainty in the Russian market," he said.

The sharp RUR devaluation amid the "sanction war" has resulted in considerable slowdown in the growth rates of private transfers to Armenia and in certain difficulties for Armenian exporters, particularly, in reduction of foreign exchange revenues especially in the processing industry and the mining industry, which has become a hostage of the tangible decline of world prices in the markets of raw materials and metals. According to the official statistics, the export of commodities and services from the country has decelerated the rates in both monthly and annual dynamics: in October 2014 export dropped by 1.1% (versus 21.3% growth in October 2012), and in the two-year dynamics the export growth rates dropped almost twofold - from 18% to 10.9%.