Armenia: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
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. However, the economic crisis induced by the Covid-19 pandemic and the armed conflict with Azerbaijan over the Nagorno-Karabakh enclave dealt significant blows to growth, resulting in negative growth in 2020. Despite these challenges, Armenia's economy displayed resilience to recent shocks, including the Russian invasion of Ukraine. It achieved an estimated growth rate of 12.6% in 2022 and 7% in 2023, driven by an influx of foreign exchange, migrants, and businesses, primarily from Russia. The IMF projects a growth rate of 5% in 2024, supported by robust personal consumption and increased government spending and investment, with a subsequent moderation to 4.5% in 2025.
Fitch Ratings reports that Armenia plans to substantially increase fiscal spending in 2024 to accommodate the large influx of refugees from Nagorno-Karabakh. Despite implementing permanent revenue-raising measures, the fiscal deficit is expected to temporarily widen to 4.5% in 2024 before narrowing to 2.9% in 2025. By the end of 2023, the general government debt stood at approximately 47.9% of GDP. Benefiting from favorable budget performance and cash reserves, authorities repurchased USD 186.8 million of a USD 313.2 million Eurobond set to mature in 2025. The IMF anticipates the debt ratio to moderately expand to 49.5% by 2025. Inflation is expected to return to the central bank’s target of 4% by mid-2024, gradually rising and stabilizing around the target in the medium term.
The unemployment rate was estimated at 13.5% in 2023 by the IMF and is expected to remain relatively stable around 14% over the forecast horizon. The national poverty rate is estimated at 24.8%, with GDP per capita (PPP) at USD 18,942 (World Bank). Around 40% of the workforce is engaged in Armenia’s informal economy, accounting for 36% of the nation’s gross domestic product, according to a study by the European Training Foundation.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 19.51 | 24.16 | 25.41 | 27.15 | 29.15 |
| GDP (Constant Prices, Annual % Change) | 12.6 | 8.7 | 6.0 | 5.3 | 4.5 |
| GDP per Capita (USD) | 6,587 | 8,153 | 8,575 | 9,163 | 9,837 |
| General Government Gross Debt (in % of GDP) | 49.2 | 50.5 | 53.1 | 53.7 | 53.8 |
| Inflation Rate (%) | 8.6 | 2.0 | 3.1 | 3.7 | 4.0 |
| Unemployment Rate (% of the Labour Force) | 13.0 | 12.5 | 13.0 | 13.5 | 14.0 |
| Current Account (billions USD) | 0.15 | -0.47 | -0.71 | -0.97 | -1.15 |
| Current Account (in % of GDP) | 0.8 | -1.9 | -2.8 | -3.6 | -3.9 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
Armenia's economy is diversified, encompassing agriculture, mineral exploitation, hydroelectricity, telecommunications, jewelry, and tourism. Agriculture accounts for 10.4% of GDP and engages 52% 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 2023, Armenia's agriculture, forestry, and fishery sectors saw no growth compared to the previous year, generating products valued at slightly over USD 2.47 billion, according to the National Statistical Committee. Agriculture experienced a slight decline of 0.3% to approximately USD 2.35 billion. Livestock production dropped by 3.4% to around USD 1.24 billion, while crop production increased by 2.7% to approximately USD 1.11 billion. Forestry sector output rose by 22.3% to roughly USD 6.69 million, and fisheries output grew by 3.6% to around USD 136.04 million.
The industry contributes 25.3% of GDP and employs 14% 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. The manufacturing sector alone accounts for 11% of GDP (World Bank). According to the National Statistical Committee (NSC), Armenia's industrial output in 2023 reached approximately USD 6.92 billion in current prices, marking a 4.1% increase compared to 2022.
Services represent 55.5% of GDP and employ 34% of the active population. The sector encompasses jewelry, 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). Armenia's Tourism Committee reported that in 2023, the country welcomed 2.3 million tourists, marking a 37.7% surge compared to 2022 and a 21.6% rise compared to 2019. Of the total, 50% arrived from Russia, 11% from Georgia, 6% from Iran, and 3% from the U.S..
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 30.3 | 17.5 | 52.2 |
| Value Added (in % of GDP) | 10.4 | 25.6 | 55.3 |
| Value Added (Annual % Change) | -0.7 | 9.4 | 17.7 |
Source: World Bank - Latest available data.
Find more information about your business sector on our service Market Reports.
| 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.
Find out all the exchange rates daily on our service Currency Converter.
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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
See the country risk analysis provided by Coface.
Foreign trade in Armenia represents 101% of GDP (World Bank, latest data available), and the country follows an open and liberal policy regarding international commerce. Overall, minerals represent more than half of total exports, which include mosltly copper ores, diamonds, gold, cigars, and ethyl alcohol. On the other hand, Armenia mainly imports motor cars, petroleum gases and oils, diamonds, and telephones (Comtrade).
According to data from Comtrade, Armenia’s main export partners in 2022 were Russia (44.6%), the United Arab Emirates (10.1%), China (7.0%), Switzerland (4.8%), Iraq (4.7%), and the Netherlands (4.0%). The Russian Federation was also the main import partner (30.4%), followed by China (15.4%), Iran (6.9%), Germany (4.6%), and the United States (4.1%). 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 neighboring 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 1% of GDP in 2022, compared to 7.9% one year earlier (World Bank). According to figures from the WTO, in 2022, Armenia exported goods with a total value of USD 5.3 billion (+77.3% year-on-year), while it imported goods worth USD 8.7 billion (an increase of 63.7%). Concerning services, the country exported USD 4.1 billion and imported USD 2.5 billion (+240.7% and +90.3% year-on-year, respectively). According to the latest figures from the National Statistics Committee (NSC), Armenia's exports in the first ten months of 2023 rose by 38.5% year-on-year, reaching about USD 5.8 billion, while imports reached USD 9.6 billion, up 42.9% compared to the same period one year earlier.
| Foreign Trade Indicators | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 5,514 | 4,559 | 5,357 | 8,769 | 12,308 |
| Exports of Goods (million USD) | 2,640 | 2,544 | 3,023 | 5,360 | 8,415 |
| Imports of Services (million USD) | 2,521 | 981 | 1,338 | 2,609 | 3,695 |
| Exports of Services (million USD) | 2,434 | 1,099 | 1,735 | 4,320 | 6,382 |
| Imports of Goods and Services (Annual % Change) | 11.6 | -31.5 | 12.9 | 33.8 | n/a |
| Exports of Goods and Services (Annual % Change) | 16.0 | -33.5 | 16.6 | 54.4 | n/a |
| Imports of Goods and Services (in % of GDP) | 54.8 | 39.7 | 43.8 | 50.7 | n/a |
| Exports of Goods and Services (in % of GDP) | 41.4 | 29.8 | 35.3 | 47.7 | n/a |
| Trade Balance (million USD) | -1,722 | -1,382 | -1,505 | -1,859 | n/a |
| Trade Balance (Including Service) (million USD) | -1,809 | -1,264 | -1,108 | -148 | n/a |
| Foreign Trade (in % of GDP) | 96.1 | 69.5 | 79.2 | 98.4 | n/a |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2023 |
|---|---|
| Russia | 40.4% |
| United Arab Emirates | 26.6% |
| Hong Kong SAR, China | 8.0% |
| China | 5.1% |
| Netherlands | 2.8% |
| See More Countries | 17.2% |
| Main Suppliers (% of Imports) |
2023 |
|---|---|
| Russia | 32.3% |
| China | 13.5% |
| Vietnam | 6.8% |
| Iran | 5.0% |
| United States | 4.6% |
| See More Countries | 37.9% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
To go further, check out our service Import-Export Flows.
Source: United Nations Statistics Division, Latest Available Data
- Civil Contract party: liberalist, reformist. It obtained 71 seats out of 107 in the latest 2021 elections
- Armenia Alliance: nationalist, pro-Russia. It has 29 seats in the National Assembly
- I Have Honor Alliance: nationalist, pro-Russia, it consists of the Republican Party of Armenia (right-wing, national conservative party) and the Homeland Party. The alliance obtained 7 seats in the latest election
Other parties include:
- Prosperous Armenia (BHK): centre-right, it is the main opposition party
- Hanrapetutyun Party: conservative, pro-European
- Armenian National Congress: social liberalism, pro-European.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: October 2024
