Page 8 - 2003-2004

INFLATION
Since 1998 the inflation rate has stabilized at a low level thus promoting
economic growth. According to official data provided by the Central Bank of
Armenia, the average inflation rate amounted to –0.8% in 2000, 3.1% in 2001 and
–1.1 % in 2002. The inflation rate for 2003 was 4.7 %.
EXPORTS AND IMPORTS OF ARMENIA
Due to sustainable economic growth and an open trade system, exports have in-
creased considerably since 1999, accompanied by import substitution as a result
of an increase in domestic production. Exports increased by 5.1% in 1999 while
import growth was negative, at -10.1%. In 2000 exports and imports increased by
28% and 9.1% respectively. In 2001 the figures showed a 14.1% export increase and
a 1.2% import decrease, while for 2002 the figures showed a 48% export increase
and a 13% import increase. In 2003, the export increase was at 34% level.

MAIN EXPORT AND IMPORT COUNTRIES FOR ARMENIA
Country 2003 Country 2003
(% of total exports) (% of total imports)
Russia 13.9 Russia 20
USA 8.3 USA 5
Belgium 18 UAE 9
Iran 6 Iran 6
GB 10 Belgium 9
Georgia 3 Greece 3
Germany 5 GB 4

COUNTRY EXPORTS EXPORTS IMPORTS IMPORTS
FOR 2003 FOR 2002 FOR 2003 FOR 2002
EU 38 % 39 % 29 % 26 %
CIS 18 % 19 % 24 % 31 %
USA 8 % 9 % 8% 5 %
Other Countries 36 % 33 % 39% 38 %

Main Export and Import Products of Armenia in 2002, 2001 and 2000(%).
PRODUCTS MAIN EXPORT MAIN EXPORT MAIN IMPORT MAIN IMPORT
PRODUCTS PRODUCTS PRODUCTS PRODUCTS
FOR 2003 FOR 2002 FOR 2003 FOR 2002
Precious and Semi-
Precious Stones 51 % 51 % 29 % 22 %
Foodstuff 11 % 11 % 7 % 8 %
Non-Precious Metals 13 % 9 % 6% 6 %
Mineral Products 7 % 8 % 13 % 18 %
Textile 15 % 6 % 35 % 4 %
Machinery 3 % 4 % 10 % 2 %

INVESTMENT POLICY AND INCENTIVES

International organizations consider the investment and trade policies of Arme-
nia to be the most open ones among all CIS countries. Foreign companies are
encouraged to invest and are entitled by law to the same treatment as local
companies, moreover they have certain advantages. Armenia’s investment climate
is continuously improving with a strong government commitment for attracting FDI,
bringing the legislative framework in line with international standards. Large-
scale privatization offers additional attractive opportunities.

The Law on Foreign Investment, adopted in July 1994, regulates foreign invest-
ments in Armenia. It provides guarantees to foreign investors and protects
investors from changes in business related laws for 5 years. According to the Law
a “Foreign Investor” is any foreign company or citizen, a person without citizen-

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