Why does Armenia’s foreign trade continue to decline?

One of the most discussed topics in recent days—namely, the volume of trade between Armenia and Russia—has overshadowed a much more important aspect: the substantive nature and dynamics of foreign trade. What do these changes indicate?

From January to August of this year, foreign trade declined by 41.1%. Trade levels fell both in January-July and in the preceding period. In effect, Armenia’s foreign trade continues its free fall. But how normal is this current drop in foreign trade statistics? What part of it is objective, and what is the result of policy—or the lack thereof?

A significant portion of Armenia’s foreign trade—34.8%—is exclusively with Russia. The European Union accounts for 12.2%, and the rest is divided among other countries. If we again separate objective and subjective factors, this picture is objective, as trade and economic ties with Russia have been established over decades, and Armenia is part of the EAEU, which also promotes mutual trade growth.

The subjective concern is that such a strong dependence on a single trade direction is unsatisfactory in any case. What’s especially noteworthy is that this dependence has deepened under a government that has spoken most about diversification.

It is particularly alarming that trade with the main partner—Russia—is also declining, and this drop is not being offset by increased trade with other countries. What is the trade dynamic with the primary partner, and what is the situation with possible alternative routes? What here is objective, and what is the result of policy—or its absence?

In fact, Russia is our main trading partner, but we are seeing a decline in mutual trade. The picture is not much brighter in other directions either. Even where growth is observed, it is insufficient to compensate for the decline in trade with the main partner.