No Real Growth in Exports to Russia

03.02.2017 | 10:02 | Economy and Energy, Eurasian Economic Union, Eurasian Economic Union

During last year, “Union of Informed Citizens” addressed the topic of nature and causes of sharp increase in exports from Armenia to EAEU member countries. Export to EAEU member countries is one of the rarest indicators which have registered progress. Thus, it is constantly emphasized as evidence for the positive economic impact of the Eurasian Economic Union on its member countries.

In January, during the meeting of the prime ministers of Armenia and Russia, Russian PM Dmitri Medvedev also talked about 70% increase in exports from Armenia, calling it one of the greatest achievements of the EAEU. However, the statistical data contain profound contradictions.

According to the data recently published by the Armenian Statistical Service, exports from Armenia to EAEU countries made up 392 million USD in 2016, compared to the 257 million in 2015. Thus, exports to EAEU countries have increased by 53% and not 70% referred to by the Russian Prime Minister. If we compare this number with the 324.6 million USD registered in 2014, we will see that exports to EAEU countries have grown only by 20% since the organization’s foundation. Moreover, the statistical data show that this growth has dubious grounds.

Hard-to-Understand Numbers

If we compare the structure of exports to EAEU countries with the situation in respective sectors of RA economy in 2016, we will come to very interesting conclusions.  First of all, in 2016, economic activity has grown only by 0.5%. Hence, a 50% growth in exports is strange, to say the least.

Studies of the commodity structure of exports show that in January-September 2016, exports of tomato paste have increased by 2000% (20 times), exports of cheese and cottage cheese have increased by 450%, and caviar and fish exports have registered more than 300% growth. Such a sharp increase has been registered against the backdrop of only 206% increase in food industry production. In parallel, exports of different vegetables have increased by 580%, as well as 1.06 million USD worth experts of goods of 0810 classification were organized to Russia. Such an increase in exports of these commodity types has been registered against the backdrop of almost 12% decline in crop production in 2016.

It is also surprising that 21 million USD increase has been registered in fabric, textile, knitwear, men’s and women’s clothing production. For some commodities in this group, exports growth has reached 960%. However, textile production in Armenia suffered a 4.8% decline in 2016. Thus, a question arises on how such a growth in exports could have possibly been registered.

In the same period, exports of vaccines have increased by more than 9.6 times, clay – 8.3 times, and heating systems, air conditioner parts, remote controls and other equipment – by 3.6 times though Armenia is not known to be producing such goods.

Thus, such findings make us look for other causes of growth in exports.

Turkish Trace

Taking into consideration the aforementioned additional data, we can state that 53% increase in exports is not the result of strengthening of Armenia’s trade positions and development of Armenian production. Rather, it is the result of simple re-export of products imported from Turkey to Armenia.

As we know, in the context of crisis in Russian-Turkish relations, Russia put an embargo on the import of Turkish goods. As a result, Turkish goods found their way to Russia via Armenia. This mechanism of re-export of goods is quite simple: countries in a common economic area import goods from countries which cannot organize direct export of goods. Thus, the imported goods are then exported to the target country, ensuring income from those operations.

The Real Picture

In parallel, exports of products of Armenian origin traditionally exported to Russia (apricots, peaches, beer, fruit juice, some types of vegetables, etc.) suffered a considerable decline in 2016.  In particular, in 2016, exports of apricots, cherries and peaches has decreased by 36% compared to the previous year, canned vegetables – 23.6%, different medications – 20%,  etc.  The decline in exports has also affected major industrial products. Compared to the previous year, exports of non-precious metals have reduced by 3%, and that of plastic goods, rubber items has decreased by 2%.  And we have should also consider here that exports from Armenia to Russia had already decreased in 2015 (compared to 2014).

Hence, we can claim that in reality, the volume of exports from Armenia to Russia has decreased after Armenia’s membership in the EAEU.

Thus, we can conclude that the sharp increase in exports from Armenia to the EAEU has been largely due to the created geopolitical situation rather than Eurasian integration and development of Armenian economy.

 

Andranik Manukyan,
“Union of Informed Citizens


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