Global decline in metal and oil prices to impact Armenia’s economy ‘in a negative light’ – expert opinion

16:17 • 09.03.20

Economy

The reported decline in the international prices of oil and metals will be a serious challenge to Armenia’s mining industries and exports, Suren Parsyan, an eonomist affiliated with the Armenian Revolutionary Federation-Dashnaksutyun (ARF-D) said today, commenting on the dynamics on the global market.

In an interview with Tert.am, he called particularly for government efforts towards shifting the focus from the mining industries to a broader diversification concept.

“Raw materials, particularly copper, account for 29.5% of Armenia’s exports. And in 2019, copper had its share increased in the total exports compared to 2018. We never had such a high record in the previous years. This is yet another concern that economy in our country is not virtually being diversified, with dependence on metals deepening even further. We have not seen tangible achievements in the sphere in the past couple of years,” he added.

Parsyan said he doesn’t expect mining and exports from Armenia against the backdrop of the fall in the copper prices. “It will not simply be advantageous, yet the decline in price may have other consequences. Mining industries will try to make savings at the expense of the environmental costs and the employees. That’s to say they will fail to fulfill their environmental and social obligations. Financial companies will be facing serious financial difficulties in case the prices keep plunging,” he added.

The economist attributed the global trends to trade wars and the Chinese coronavirus infection.

“We have been experiencing declines in the past couple of months for very different reasons. That’s, on the one hand, due to trade wars between different countries – both discguised and non-disguised - and on the other hand, coronavirus which emerged in the past couple of months, producing a heavy impact on the Chinese economy – that had practically come to a halt in several regions. The decline in the international prices of metals and oil is natural under such conditions as the paces of the demand is not growing faster compared to the supply,” he added.

Parsyan also shared his predictions of a real surge on the domestic market.

He warned, particularly of a drop in copper prices and a drastic decline on the oil market (30%).

“The first impact deals with the sharp decline in metal prices, reducing also the export volumes. The second has to do with the depreciation of the Rusisan Ruble, which has already taken place, with [the exchange rate for] USD 1 having surged to 72 Rubles or 482 [Armenian Drams]. Should these processes continue, they will naturally cause a surge in the prices of the imported goods (in case we face a currency depreciation). With lower salaries last year, people could thus afford more goods and services than they will this year with 5%-10% higher monthly income,” he added.

Armenian News - Tert.am