While Armenia importers and even tourists might be in a celebratory mood as the European Union’s single currency, the Euro, is plunging amid the continuing budget deficit crisis in Greece, experts say the difficulties experienced in Europe do not bode well for the Armenian economy in the longer term.

Greece, one of the 27 European Union member countries and a country of the Euro zone, has been in crisis over its ballooning debts and despite a huge international bailout is still threatening the EU financial stability. Greece’s foreign debt is now estimated at €300 billion, or $366 billion, (and the country’s total debt makes 113 percent of its Gross Domestic Product).

Experts say the Greece crisis is also indirectly affecting the economics of the non-EU zone countries, including Armenia.

The single European currency, the Euro, was trading at as high as 580 drams in early February. Only a few weeks ago one could buy one euro at most foreign currency exchange offices in Yerevan for 545 drams. The exchange rate has fallen to 465-475 drams per euro and lower since then.

While economists say that the continuing depreciation of the EU currency may have both negative and positive consequences for Armenia, most agree that it is rather not favorable for the country’s economy in the longer term, because the European Union and Armenia have quite close economic ties, and the problems of the Euro zone will inevitably have an impact on those relations.

Member of the Board of the Economy and Values research center Sevak Hovhannisyan says that since the fluctuation of the euro exchange rate is not a primary factor, but only consequence of the current problems of the Euro zone, the devaluation of the single European currency may have a greater impact on the Armenian economy.

According to the 2009 data, 45 percent of Armenia’s export was made towards the European Union countries, and almost a third of imports, 27 percent, have come from the EU zone.

“In the short term the depreciation of the euro may have an impact on the commodity turnover, since European goods will become cheaper for us, and our goods will be more expensive for Europeans,” says Hovhannisyan, adding that it opens up prospects for more lucrative imports from EU countries for Armenian importing businesses. (At the same time, the countries of the Euro zone will also see the price competitiveness of their goods and services rise.)

The economist thinks, however, that in the long term the fall of the euro will have a more negative effect on Armenia.

“In 2009, 35 percent of foreign investments in Armenia were made by EU-based companies. With the falling value of the euro spending in Armenia will become more expensive for them,” says Hovhannisyan.

According to him, a weaker euro isn’t favorable also from the point of view of Armenia-EU intergovernmental cooperation.

“The EU is one of the largest donors of Armenia and if internal problems aggravate within the EU, then they will direct their financial means first of all at solving their own problems,” says the economist.

As for whether the cheaper euro may increase the number of Armenian tourists choosing Euro zone countries’ travel destinations, Hovhannisyan says that in this matter everything is more dependent on prices in European countries, which, he says, still continue to remain high for an average Armenian.

Anna Petrosyan, director of Geographic Travel Club, a travel agency in Yerevan, says an increase in the number of tourists choosing European destinations has been observed in the past several months. However, she believes the major reason is not a cheaper currency, but the offer of less expensive air tickets by European airlines that suffered great financial losses in April because of a volcano eruption in Iceland and are now trying to recover their costs (and boosting their business) also by offering less expensive flights to their customers.