Armenia's Hospitality is Cooling: A Study of Services Exports
For the study of Armenia’s service exports and imports, quarterly data from the RA balance of payments was used. The analysis of the data showed that in 2020 the trade turnover of services had a significant decline, mainly due to the decrease in the export and import of tourism services. In 2021 and especially in 2022 there is a recovery growth in the trade turnover of services, which continued until the fourth quarter of 2023. In the fourth quarter of 2023 the export of almost all services has already decreased.
Chart 1.
Both imports and exports of services have experienced a decline since the 4th quarter of 2023.
As can be seen, the main sectors for Armenia’s service exports in 2023 were travel and IT services, worth 3 billion and 1 billion dollars respectively, which constituted 53.5 and 19.1 percent respectively of service exports in 2023. The growth of these services in 2022-23 also secured a significant portion of our economic growth. The trend of service contraction, which may continue into 2024, is concerning especially from the perspective of securing the current account balance and the 7 percent economic growth planned by the state budget law.
After two and a half years of recovery and sharp growth, since the 4th quarter of 2023 the export and import of almost all services have contracted. The ratio of the fourth quarter of 2023 to the third quarter shows that tourism or travel services contracted by almost 2 times, by 42.6 percent, despite the fact that on an annual basis the export of tourism services grew by 23.3 percent, reaching 3 billion dollars. That is to say, tourists purchased 3 billion dollars worth of tourism services in Armenia in 2023. The growth of 2023 was mainly formed at the expense of continuous growth in the first 3 quarters. Let us also note that in 2022 service exports grew by more than 3 times, mainly due to post-pandemic recovery growth and the addition of a large number of Russian tourists and relocants.
Table 1.
| Armenia’s Services Export Trend 2018-2023 | ||||||||
| million US dollars | ||||||||
| Service Name | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2023 Q4* | |
| Travel | mln $ growth | 1 329.0 10.4% | 1 528.0 15.0% | 287.3 -81.2% | 784.2 172.9% | 2 439.1 211.0% | 3 009.3 23.4% | -42.6% |
| IT, telecommunications | mln $ growth | 235.8 11.4% | 261.7 11.0% | 328.5 25.5% | 382.4 16.4% | 711.4 86.0% | 1 074.0 51.0% | -8.7% |
| Transport | mln $ growth | 256.3 10.7% | 275.4 7.4% | 232.4 -15.6% | 304.4 31.0% | 585.2 92.2% | 895.8 53.1% | 70.4% |
| Construction | mln $ growth | 191.1 -7.7% | 178.1 -6.8% | 77.7 -56.4% | 86.1 10.9% | 104.2 21.0% | 87.5 -16.1% | -19.2% |
| Other business services | mln $ growth | 45.9 -6.1% | 43.2 -5.7% | 42.4 -2.0% | 36.2 -14.6% | 56.0 54.7% | 65.6 17.2% | -7.5% |
| Material resources belonging to other parties… | mln $ growth | 35.5 67.1% | 27.2 -23.3% | 36.8 35.0% | 41.0 11.6% | 111.0 170.3% | 200.2 80.5% | -38.1% |
| Government goods and services | mln $ growth | 44.5 7.9% | 45.5 2.2% | 33.2 -27.0% | 37.3 12.4% | 38.2 2.3% | 34.2 -10.5% | -7.5% |
| Insurance and pension services… | mln $ growth | 28.0 8.3% | 31.5 12.2% | 28.7 -8.8% | 34.7 21.0% | 61.1 76.1% | 77.0 26.0% | 18.8% |
| Financial services | mln $ growth | 14.4 45.9% | 19.0 32.2% | 19.1 0.5% | 14.2 -26.0% | 198.3 1 301.1% | 158.9 -19.8% | 0.3% |
| Personal, cultural and entertainment services… | mln $ growth | 19.0 0.6% | 19.3 1.8% | 10.3 -46.5% | 11.1 7.7% | 11.4 2.5% | 11.7 2.1% | -6.5% |
| Maintenance and repair… | mln $ growth | 2.8 -0.1% | 4.7 72.5% | 3.0 -37.6% | 3.5 19.1% | 4.5 26.9% | 5.2 15.8% | -2.5% |
| — | — | — | — | — | — | — | — | — |
| * 2023 Q4 - The ratio of the fourth quarter of 2023 to the third quarter |
As can be seen from the first table, in the fourth quarter of 2023 all service exports tend to contract with the exception of transport and pension services. Financial services showed negligible growth in the 4th quarter of 2023, despite financial services contracting by 19.8 percent on a yearly basis.
We also note that in 2022, 43 percent of the export of goods and services were services, and in 2023 that indicator dropped to 39.8 percent.
You may also be interested in the following analysis:
💹🚀♻🟨 Gold Fever: Half of Armenia’s Goods Exports are Re-exports.
Chart 2.
Let us also examine the decline in service exports and imports in 2020.
The outbreak of the coronavirus pandemic had a major impact on the indicators of service exports and imports in Armenia. In 2020 a significant decline in the service trade turnover was recorded, encompassing both import and export indicators. In 2020 service imports decreased by 61.3%, falling from 2485 million US dollars down to 961 million US dollars. Service exports decreased by 55.9%, falling from 2402 million US dollars down to 1060 million US dollars. The substantial decrease in trade turnover was primarily due to a sharp contraction in the export and import of tourism services.
The tourism sector, which significantly contributes to trade in services, experienced a severe setback in 2020 due to the pandemic. A significant drop in the volumes of both export and import of tourism services was recorded: exports in 2020 decreased by 82.0%, and imports by 84.5%. These figures underscore the heavy dependence of the services trade sector on tourism. Another notable aspect of the decline in services trade turnover was the reduction in the import of transport services. A 36.3% decline was recorded in 2020.
Chart 3.
You may also be interested in the following analysis:
Despite the significant decline in services trade turnover in 2020, there is substantial recovery growth in the import and especially the export of services in 2021 and 2022. As can be seen from the first table, service exports in Armenia grew by almost 3.5 times in 2022.
In 2022 service exports amounted to 4.2 billion dollars: tourism services at 58.4%, information technologies at 17.0%, transport services at 13.4%, construction services at 2.5%. In 2021 service exports amounted to 1.7 billion dollars: tourism services at 45.2%, information technologies at 22.0%, transport services at 17.5%, construction services at 5.0%.
As can be seen from the third chart, Armenia imports more transport services than it exports. The balance of transport services in Armenia is in deficit. This indicator is correlated with the import and export of goods.
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How Many Armenians Will We Have in Armenia in 2100?
- 🔘 What is Armenia’s population and how has it changed in recent years?
- 🔘 What will happen with the arrival of Artsakh Armenians, Russians, and Indians?
- 🔘 What is the gender and age structure of Armenia’s population like?
- 🔘 How many Armenians will we have in the near future?
On How2B we “talk in numbers” with economist Aghasi Tavadyan.
- 00:00 The overall demographic situation in Armenia
- 01:53 Demographic phases in the world over the last 100 years
- 03:06 Armenia’s population change over the last 30 years
- 06:57 Russians, Artsakh Armenians, and Indians have come to Armenia. How is the situation changing?
- 10:44 We are also becoming an aging nation
- 12:22 There are more women in Armenia, although fewer girl children are born
- 17:55 We summarize
An analysis on the topic is presented on the tvyal.com website: 👫🧭💀 2 Million Armenians in Armenia in 2100
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