Polished diamonds have traditionally been one of the biggest drivers of Armenia’s economic growth. After several years of sustained double digit economic development one would anticipate a decline in growth of several. But when it comes to diamonds – it is erosion, and that is quite dangerous. We have been hearing also a lot of complaints from the IT sector: one of the other priority areas. It looks as though anything the government attempts to develop, breaks to pieces in the end. Is it one more proof of incompetence, or is it targeted espionage ;)? I wonder which sector will come next – I suspect a market crash as a result of the real estate boom. Not very optimistic, am I?
RAPAPORT… The Republic of Armenia’s polished diamond output fell 35 percent to AMD 25 billion (about $74 million) in the first six months of 2007, continuing what has become a four year long decline in the industry.
Gagik Mkrtchian, head of the precious stones and jewelry department at the Armenian Ministry of Trade and Economic Development, explained the decrease is lead by weak demand for diamond jewelry from consumers in the United States.
Other factors affecting Armenia’s diamond decline, Mkrtchian explained, included the appreciation of the country’s currency, Armenian Drams, against the dollar, and a shortfall in anticipated deliveries of rough diamonds from Russia.
Armenia signed an agreement with Russia in 2001 whereby local companies would process up to 400,000 carats of Russian rough annually. The quota was subsequently raised to 450,000 carats for 2005 and 2006, but only a fraction of that actually was delivered in 2005 while no rough arrived in 2006, Armtown reported.
Armtown noted that Armenia’s polished diamond output, once a priority industry for the country, had declined from AMD 117 billion ($345 million) in 2004 to AMD 93 billion ($273 million) in 2006.
Mkrtchian said the bulk of the Armenia’s current rough supply was coming from Israel and Belgium.
Separately, Armenia’s National Statistical Service reported the country’s economy grew 11.2 percent in the first half of 2007.