Worsening economic situation in Russia affects Armenian exports- head of union says
The worsening economic situation in Russia and the ruble’s depreciation are affecting Armenian exports to that country, Gagaik Makaryan, the chairman of the Union of Employers of Armenia said in an interview with ARKA news agency.
"As a major trading partner of Armenia, Russia’s influence on its trading activities is quite large. Suffice it to note that the Armenian-Russian trade accounts for about 24% of Armenia’s total foreign trade, " said Makaryan.
He said the dramatic devaluation of the Russian ruble in late 2014 made Armenian exports to that country unprofitable.
"When the economic situation began to deteriorate in Russia and the ruble began to fall, Russian businessmen were forced to carry out commercial transactions in rubles. Because of the "cheap" ruble Armenian businessmen began suffering heavy losses, and many of them simply ceased exports of their products to Russia," he explained.
For example, Armenian exports to Russia in January-July 2015, according to the National Statistical Service, declined by about 42% to about $107.2 million, down from $164.6 million a year ago.
Makaryan said some Armenian businessmen resumed exports of their goods to Russia after a relative stabilization of the Russian economy in May, but because of another round of the ruble’s devaluation they are facing now a dilemma – either to continue trading with Russia so as not to lose this market or to suspend export operations.
Makaryan said Western sanctions against Russia are another negative factor forcing a drop in Armenian export to Russia. "Western sanctions against Russia have resulted in global structural changes and businesses in countries such as Turkey, Chile, Argentina and Georgia managed to win segments of the Russian market creating additional competition for Armenian business", Makaryan said.
Makaryan said also that a major problem of the Armenian economy is lack of diversification.
‘With the exception of companies engaged in the mining business and two brandy-producing factories the rest of Armenian exporters are SMEs, which are now having serious problems with availability of funds after local banks have toughened lending terms,” he said.
He said in order to correct the situation with exports, SMEs need state support in finding new markets, as well as better availability of funds.
According to Makaryan, domestic entrepreneurs should enhance also their level of literacy in order to enter international markets and gain international certification, and their products must conform to international quality standards to be competitive.-0-