Armenia declined in its diamond production by 35% during first half of 2007, to $72 million (AMD25 billion), when analysed against the same period of 2006. According to Gagik Mkrtchian, the head of the jewellery department at the ministry of trade and economic development, the country has consistnely dipped in its diamond production over the three years, from $325 million (AMD113 billion) in 2005 to $268 million (AMD93 billion) in 2006.

He said the decline in demand for its diamonds in its largest market, the U.S. and the appreciation of the of Armenian dram against the US dollar has lead to the decline of production. Also, as rough diamond imports from Russia were completely stopped since 2006, Armenia’s production was affected.

Russia had failed to keep up its commitment of supplying 450,000 carats. The Russian diamond producer Alrosa is planning to establish a $50 million retail chain and may use Armenia as a manufacturing base.