Economist raises concerns over Armenian export competitiveness amid inflated USD/AMD exchange rate (video)
YEREVAN, April 13. /ARKA/. Armenian exports to the United States may not face direct repercussions from the tariffs introduced by US President Donald Trump. However, economist Hrant Mikayelyan highlights that Armenian goods will encounter stiffer competition in various other markets beyond Russia.
President Trump has enacted new tariffs on imports from 183 countries, including Armenia, which is subject to a 10% duty.
Mikayelyan warned in an interview with ARKA Business program on ARKA YouTube channel that this situation may intensify competition among exporters from Europe, Japan, and China as they strive to mitigate their losses in the U.S. market, potentially putting Armenia at a disadvantage.
While acknowledging that Armenia's exports to the U.S. are minimal—due in part to logistical barriers—Mikayelyan noted that the nation's exports to America typically range between $50 million and $60 million, marking a small fraction of overall trade.
In contrast, imports from the U.S. have historically been much greater, implying that this side of trade is unlikely to be adversely affected.
Despite the anticipated challenges, Mikayelyan asserts that the overall damage for Armenia will be limited, as the global market is likely to feel the impact as well. He emphasized the need for Armenia's foreign trade and exports to enhance their competitiveness, attributing the bulk of current challenges to the high exchange rate of the national currency dram. However, he believes this rate won't remain elevated indefinitely.
Mikayelyan explained that once the conflict in Ukraine resolves or sanctions on Russia are lifted, the dram's value is expected to decline naturally. He criticized the Central Bank of Armenia for permitting the dram's revaluation, suggesting that if 'we isolate exports of domestically produced goods, there has been insufficient growth in recent years,' indicating a detrimental effect on foreign trade.
To bolster competitiveness, he proposed a gradual devaluation of the dram, targeting a rate near 480 drams per dollar. Furthermore, he pointed out that enhancing overall competitiveness will require a comprehensive strategy, which includes improving labor force capabilities, technical advancements, and logistics. However, he reiterated that the primary focus should be on addressing the dram's exchange rate.
According to Armstat, Armenia's trade with the U.S. in 2024 reached approximately $410.6 million, reflecting a significant decline of 38.7% from 2023. Exports to the U.S. were about $58.9 million, a 21.5% increase, while imports topped $351.6 million, a drop of 43.4%.-0-
