Monday, 24 September

Armenia's Jewelry Sector: Despite Problems, Potential for Growth Exists

The World Jewellry Confederation (CIBJO) has decided to hold its 2016 conference in Yerevan. 

Hosted by the Armenian government and the Armenian Jewellers Association, the conference will welcome some 1,000 participants from around the world and will present a unique opportunity for Armenia to market its locally manufactured goods, potential and ideas to an international audience.

Despite existing problems (operating in the shadow economy, imbalance between quality and prices, inadequacies in the legal sector, etc.) the jewelry trade can become an economic locomotive for Armenia.

The country has gold mines and top quality jewelers. Jewelry exports, in terms if customs valuation, are at the top of the list when it comes to exports from Armenia.

When trying to gauge Armenia’s potential in this sector, we can look at certain data – production, export, import and domestic consumption figures.

In fact, the jewelry sector is one of the few economic sectors in Armenia that not only has re-attained pre-2008 financial crisis levels but has seen a doubling as well.  

Reviewing data issued by Armenia’s National Statistical Service for the past eight years we see that after a dip in 2009 production amounts gradually rose, reaching a post-2008 peak in 2013 (19.417 million AMD). In 2014, this figure dropped 45.2% to 10.758 million).

In the first quarter of this year, 3.099 billion AMD worth of jewelry was produced. This represents a drop of 29% over the same period last year.

A majority of what is produced is eventually sold locally. A portion is also based on orders from overseas. Evidently, demand has fallen.

In July 2013, Armenia’s Ministry of Economy unveiled its strategy for developing the jewelry sector. It was revealed that the sector uses bank gold, all of which is imported.

Bank gold reserves are directed to the jewelry sector. In contrast, all the gold that is mined in Armenia is exported for reprocessing.

The jewelry sector in Armenia is dominated by small and medium sized enterprises, and individual proprietors, using their own capital. Some producers export all or most of what they make. Others work according to orders placed from overseas. Most producers are still using outdated equipment, some from the Soviet era. New equipment and technologies, however, are making inroads.

When it comes to exports, the United States was the largest market for made in Armenian jewelry until 2009. Between 2001 and 2006, 70-85% of Armenia’s exports went to the U.S.

In 2010 and 2011, Turkmenistan and Thailand took over as the largest importers of Armenian jewelry.

A significant factor in the fall of the U.S. market was that companies launched by investment from the diaspora ceased operations.

While production dropped in 2014, exports grew to US$23.3 million.

The major markets for jewelry made in Armenia are Turkmenistan, the UAE, Russia, Kazakhstan, Thailand and Belize. Much smaller amounts go to Belarus, the U.S and Turkey.

Armenia imports very little jewelry relative to local production and consumption. In 2014, the country imported 252 kilograms of jewelry at a valuation of $2.4 million. Over the past fifteen years the annual valuation of jewelry imports to Armenia hasn’t exceeded $3.14 million. Most of the imports come from Italy, Thailand, the U.S. and Turkey.

This data goes to prove that Armenia’s jewelry sector has the potential to expand its presence in the international market. Resolving the sector shortcomings will provide the opportunity to expand that potential.

Jewelry produced by Armenians, both in Armenia and the diaspora, is sold the world over. It is a craft that has been mastered and practiced in Armenia for centuries and has a rich tradition.

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