Armenia, a pivotal player in the ever-evolving global trade dynamics, has witnessed an economic surge after the Ukraine crisis. The trade route, particularly in used cars, has seen a remarkable uptick, contributing to Armenia's robust economic growth. This resilience comes amid challenges posed by Western sanctions and the departure of multinational corporations.
Used Cars: The Driving Force Behind Armenia's Economic Boom
In the wake of Russia's invasion of Ukraine and subsequent sanctions impacting the availability of Western car brands, Armenia has emerged as a crucial player in the trade of used cars. Young Russian traders capitalise on the burgeoning trade route, creating economic opportunities for Armenia. The surge in used car exports, from $800,000 in January 2022 to over $180 million in the same month in 2023, reflects the significant impact on the country's economy.
Armenia's Diverse Export Boom: Beyond Automobiles
While used cars are spotlighted, Armenia's export landscape extends beyond automobiles. Various goods, propelled by an influx of exports, have resulted in nearly double the trade volume between Armenia and Russia in 2022. The country has become a central hub in a thriving trade route for consumer goods, further contributing to its economic growth.
Economic Boom Amidst Frustration: Western Capitals and Export Controls
Armenia's economic success, fueled by increased exports, has, in turn, sparked frustration among Western capitals. Concerns over the enforcement of export controls and accusations of being used to "smuggle prohibited goods" into Russia have led Armenia to face scrutiny. The EU's sanctions targeting third-country circumvention have included entities in Armenia, reflecting the complex dynamics of global trade.
Armenia's GDP Soars: A Record Growth of 13% in 2022
The economic boom has translated into tangible results, with Armenia's gross domestic product (GDP) recording a remarkable growth of 13% in 2022. This surge, more than double the previous year's rate, underscores the resilience and adaptability of Armenia's economy amidst changing global trade patterns and geopolitical shifts.
Denials and Diplomacy
Despite being listed among countries involved in the "smuggling of prohibited goods," Armenia vehemently denies these accusations. Prime Minister Nikol Pashinyan dismisses such reports as rumours, emphasising the country's commitment to restricting trade in risky items. The Armenian government maintains cooperation with the US and the EU, implementing strict controls over items that the Russian military could potentially use.
