Armenia: Economic and Political Overview

Economic Indicators

Armenia has experienced rapid economic growth in recent years, propelled by expatriate remittances, rising international copper prices, and a business-friendly monetary policy. The country benefits from abundant mining resources including molybdenum, zinc, copper, and gold, as well as financial support from international organizations. Membership in the Eurasian Economic Union (EAEU) and a partnership with the EU also contribute to its economic strengths. Despite challenges (including the Russia-Ukraine conflict), GDP growth was sustained in 2024, at 6%, driven by robust domestic demand, including the ongoing acceleration of public investment. With slowing goods exports, tourism, and declining financial inflows, Armenia's growth is projected to decelerate to 4.9% in 2025. Gradual fiscal consolidation and normalized credit growth are expected to guide economic activity, with growth stabilizing at its potential rate of 4.5% (IMF).

Concerning public finances, the fiscal deficit was projected to rise to 4.7% of GDP in 2024, driven by refugee support, high domestic interest payments, and substantial capital expenditures. The 2025 fiscal deficit target is set at 5.5% of GDP to accommodate urgent spending, prioritizing national security and refugee integration. Social assistance, housing, pensions, education, health, and regional development remain key focuses while spending on goods and services will be further rationalized. The rollout of Universal Health Insurance and the new family benefits system will be delayed. Conversely, the debt-to-GDP ratio increased to % in 2024 (from 50.7% one year earlier) and should increase marginally to 56.6% by 2026 (IMF), as debt dynamics are highly exposed to currency risk (as of October 2024, 48.6% of the debt was foreign-exchange-denominated). In 2024, the consumer price index increased 0.3% y-o-y, although inflation is expected to gradually rise toward the 4% target in the medium term given monetary easing, with transportation costs and above potential growth also expected to exert inflationary pressures (IMF).

The unemployment rate was estimated at 13% in 2024 by the IMF and is expected to remain relatively stable at around 14% over the forecast horizon. The national poverty rate is estimated at 23.7%, with GDP per capita (PPP) at USD 23,376. Around 40% of the workforce is engaged in Armenia’s informal economy, accounting for 36% of the nation’s gross domestic product, according to the World Bank's Informal Economy Database.

Main Sectors of Industry

Armenia's economy is diversified, encompassing agriculture, mineral exploitation, hydroelectricity, telecommunications, jewellery, and tourism. Agriculture accounts for 8.5% of GDP and engages 52.3% of the total workforce (World Bank, latest data available). Main crops include potatoes, tomatoes, grapes, wheat, melons, cotton, and tobacco. The livestock sector represents almost 40% of the country’s gross agricultural product. Armenia faces challenges due to limited arable land cultivation, fragmented plots, and low growth potential attributed to political instability. In 2024, the gross volume of production in Armenia's agriculture, forestry, and fish farming sectors totalled ARD 1,020,542.8 million at current prices, up 0.9% from 2023, according to the National Statistical Committee. Agricultural production grew by 1.6% to ARD 958,804.3 million, with animal husbandry rising 2.2% to ARD 503,237.2 million and crop production increasing 0.9% to ARD 455,567.1 million. The country sold 183.8 thousand tons of meat (live weight) to slaughterhouses, up 4.6%, while milk production fell 0.9% to 574.4 thousand tons, and egg production declined 1.5% to 721.2 million.

The industry contributes 23.4% of GDP and employs 14.1% of the total workforce. Armenia boasts deposits of copper, molybdenum, bauxite, zinc, lead, iron, gold, and mercury, forming the basis of its chemical industry sector and primary exports, especially metal ores. The mining sector, notably metal ores, is one of the largest contributors to GDP and exports. Armenia's well-developed hydroelectricity sector enables it to export electricity, although much of it is foreign-owned. Overall, the manufacturing sector alone accounts for 11% of GDP (World Bank). In the first ten months of 2024, Armenia's industrial output reached USD 5.98 billion, up 11.7% from the same period in 2023, according to the Statistical Committee. Growth was driven by manufacturing and energy production, despite challenges in mining and quarrying.

Services represent 59.4% of GDP and employ 33.6% of the active population. The sector encompasses jewellery, boosted by the quality of its diamonds, and tourism. The ICT sector is also burgeoning and is prioritized by the government. The banking sector, particularly robust and stable, consists of 17 commercial banks (European Banking Federation). According to the Minister of Economy, Armenia welcomed 2.2 million tourists in 2024, marking a 7% decrease from the previous year mostly due to a decrease in visitors from Russia. The government has set a target of 2.6 million tourists to be reached by 2026. The retail sector is also important: the domestic trade turnover for 2024 totalled ARD 6,378,265.3 million at current prices, reflecting a 17% increase compared to 2023, according to the National Statistical Committee of Armenia.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	52.3	14.1	33.6
Value Added (in % of GDP)	8.5	23.4	59.4
Value Added (Annual % Change)	2.9	2.7	12.2

Source: World Bank - Latest available data.

 

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Monetary Indicators	2016	2017	2018	2019	2020
Armenian Dram (AMD) - Average Annual Exchange Rate For 1 MUR	13.52	14.00	14.23	13.53	12.43

Source: World Bank - Latest available data.

 

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:

71,9/100

World Rank:

32

Regional Rank:

18

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

 

Foreign Trade in Figures

Foreign trade in Armenia represents 120% of GDP (World Bank, latest data available), and the country follows an open and liberal policy regarding international commerce. Armenian exports of precious stones, metals, and related articles surged 2.3 times to USD 3.2 billion in 2023, becoming the largest export group. Machinery and equipment followed, growing 79.6% to USD 1.29 billion. Mineral products and ready-to-eat foods ranked third and fourth, with exports of USD 887.7 million and USD 885.1 million, respectively, reflecting declines of 13.6% and a slight increase of 0.3%. Vehicles for land, air, and water transport rounded out the top five, growing 64.9% year-on-year to USD 548.3 million (National Statistical Committee of Armenia, 2023). On the other hand, imports of machinery and equipment were the largest product group, rising 42.3% in 2023 to USD 2.46 billion. Precious and semi-precious stones, metals, and related articles followed, with a 233.0% increase to USD 2.30 billion, making it the second largest group. Vehicles for land, air, and water transport ranked third, reaching USD 1.83 billion after a 91.3% rise. Mineral product imports decreased by 6.9% to USD 1.11 billion, making it the fourth largest group. Textiles, the fifth largest, increased 63% to USD 650 million.

According to data from OEC, Armenia’s main export partners in 2023 were Russia (37.5% of the total), the United Arab Emirates (24.9%), Hong Kong (7.4%), China (4.7%), and Georgia (3.8%); whereas imports came chiefly from Russia (29.0%), China (12.1%), Vietnam (6.1%), Georgia (5.3%), and Iran (4.5%). The country has been searching for new energy sources, especially after the Russian-Georgian conflict, which temporarily disrupted its hydrocarbon supply and revealed the country's energy vulnerabilities. Tensions remain with a couple of its neighbouring countries, such as Azerbaijan and Turkey, and have an impact on trade. Armenia's closeness with Russia and its adherence to the Eurasian Economic Union limit the country's ability to further integrate with the EU.

Armenia has a structural trade deficit, estimated at 0.8% of GDP in 2023, compared to 1% one year earlier (World Bank). According to figures from the WTO, in 2023, Armenia exported goods with a total value of USD 8.4 billion (+57% year-on-year), while it imported goods worth USD 12.3 billion (an increase of 40.3%). Concerning services, the country exported USD 6.3 billion and imported USD 3.7 billion (+47.7% and +41.6% year-on-year, respectively). According to preliminary figures from the National Statistics Committee (NSC), Armenia's foreign trade in 2024 surged by 41.5% from 2023, reaching over USD 30.1 billion. Exports increased by 53.1%, amounting to over USD 13 billion, while imports reached over USD 17 billion, recording a 33.8% increase compared to 2023.

Sources of General Economic Information

Ministries

Ministry of Agriculture
Ministry of Energy and Natural Resources
Ministry of Economy

Statistical Office

National Statistical Service

Central Bank

Central Bank of the Republic of Armenia

Stock Exchange

Armenian Securities Exchange

Search Engines

SPYUR Business Directory

Economic Portals

Armenian News Agency

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