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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Armenia has been growing at a fast pace in recent years. Expatriate remittances, an increase in international copper prices, and a business-friendly monetary policy aided the country's economic development. Other strengths include major mining resources (molybdenum, zinc, copper, gold), financial support from international organizations, considerable foreign exchange reserves, and membership in the Eurasian Economic Union (EARU) as well as a partnership with the EU. However, the economic crisis caused by the Covid-19 pandemic and the armed conflict with Azerbaijan over the Nagorno-Karabakh enclave severely affected growth, which turned negative in 2020. Despite that, Armenia’s economy has shown resilience to recent shocks – including the Russian invasion of Ukraine – and grew by an estimated 7% in 2022), driven by large inflows of external income, capital, and labour into the country. Amid tighter global financial conditions and weaker external demand, the IMF expects growth to decelerate to 3.5% this year and 4.4% in 2024.

According to IMF data, public debt represented 52.3% of GDP in 2022, returning around the pre-pandemic level, and should remain stable over the forecast horizon. External debt decreased both in dollar and dram terms, as the national currency appreciated 22% over the year, becoming the world's top-performing currency. The state budget for 2023 forecasts a deficit of 3.1% of GDP: expenses for the year are planned at AMD 2 trillion 590 billion (27.8% of GDP), or 18.3% more than in the approved budget for 2022, while revenues should also grow to AMD 2 trillion 204 billion. Inflation has increased to 8.5% in 2022 on the back of supply and demand shocks and the Central Bank has raised the policy rate by 625 basis points aiming to steer inflation toward its medium-term target of 4%. According to the IMF forecast, the inflation rate should gradually decrease to 7% in 2023 and 5% in the following year. Armenia’s economy continues to face structural challenges, such as the need for further improvement in the business and investment environment, high unemployment, lingering labour skills mismatches, and weak firm competitiveness. Significant structural reforms have taken place in the areas of public financial management, revenue administration, the financial sector, and governance (IMF).
The unemployment rate was estimated at 15.2% in 2022 by the IMF and should remain relatively stable over the forecast horizon. The latest governmental figures show that the national poverty rate is estimated at 26.5%, while the GDP per capita (PPP) stood at USD 16,798 as of 2022.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 19.5124.5426.9429.0031.08
GDP (Constant Prices, Annual % Change) 12.67.05.04.54.5
GDP per Capita (USD) 6,5878,2839,0919,78610,488
General Government Gross Debt (in % of GDP) 49.247.948.749.549.6
Inflation Rate (%) n/a3.54.04.04.0
Unemployment Rate (% of the Labour Force) 13.013.514.014.014.0
Current Account (billions USD) 0.15-0.33-0.61-0.81-1.00
Current Account (in % of GDP) 0.8-1.4-2.3-2.8-3.2

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Armenia's economy is based on agriculture, mineral exploitation, hydroelectricity, telecommunications, jewellery, and tourism. Agriculture represents 11.3% of GDP and employs 24% of the total workforce (World Bank, latest data available). Armenia suffers from low levels of cultivation of arable land, limited resources and low growth potential due to political instability. Small and fragmented plots are used for subsistence agriculture. Main crops include potatoes, tomatoes, grapes, wheat and melons, cotton and tobacco. Armenia's livestock sector is also pivotal, representing almost 40% of the country’s gross agricultural product. The latest figures from FAO show that the 2022 total cereal output was forecast at about 233,000 tonnes, 5% below the five-year average; while that of wheat and barley was estimated at 130,000 tonnes and 70,000 tonnes, respectively, above the low outputs harvested in 2021, but still slightly below the average levels.

The industry contributes 26.6% of GDP and employs 25% of the total workforce. Armenia has copper, molybdenum, bauxite, zinc, lead, iron, gold, and mercury deposits, the basis of the country’s chemical industry sector and its main exports. The mining sector is one of the largest contributors to GDP and exports (especially metal ores). Hydroelectricity is very well developed in the country, to the point that Armenia is now exporting it (although most of it is foreign-owned). The manufacturing sector alone accounts for 11% of GDP (World Bank). According to official government data, the industrial output in 2022 grew by 7.8% year-on-year to about AMD 2.76 trillion.

Services represent 52.8% of GDP and employ 51% of the active population. The sector includes jewellery (particularly because of the size of its diamonds) and tourism. The ICT sector is also growing and is considered a priority by the government. Banking, in particular, has grown: it is considered a solid and stable sector and is composed of 17 commercial banks (European Banking Federation). The tourism sector was severely affected by the COVID-19 pandemic and the travel restrictions that followed; nevertheless, it showed signs of recovery in 2022, as the country welcomed 1.54 million tourists in the first eleven months of the year (around 83% of the pre-pandemic level – data Tourism Committee).

 
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.

 
Monetary Indicators 20162017201820192020
Armenian Dram (AMD) - Average Annual Exchange Rate For 1 USD 480.49482.72482.99480.40489.01

Source: World Bank - Latest available data.

 

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Foreign Trade

Foreign trade in Armenia represents 70.1% of GDP (World Bank, latest data available), and the country follows an open and liberal policy in regard to international commerce. Overall, minerals represent more than half of total exports. Main export commodities include copper ores, undenatured ethyl alcohol, cigars, ferroalloys, and gold. Armenia mainly imports petroleum gases and oils, medicaments, diamonds, and motor cars.

Armenia's main export destinations are Russia (26.8%), China (13.3%), Switzerland (12.1%), Bulgaria (6.7%), and the Netherlands (6.4%). The Russian Federation is also the main import partner (33.5%), followed by China (16.2%), Iran (8.2%), Italy (4.2%) and Germany (3.9% - data Comtrade). 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 adhesion to the Eurasian Economic Union limit the country's ability to further integrate with the EU (that considered as a whole is the country’s main export destination).

Armenia has a structural trade deficit, which was estimated at 8.5% of GDP in 2021 (World Bank). According to figures by WTO, in 2021, Armenia exported goods with a total value of USD 3 billion (+18.8% year-on-year), while it imported goods with a total value of USD 5.3 billion (recording an increase of 17.5%). With regards to services, the country exported USD 1.6 billion and imported USD 1.2 billion (+56.2% and +32.8% vis-à-vis one year earlier, respectively). According to the latest figures by the National Statistics Committee (NSC), Armenia's exports in the first ten months of 2022 rose by 71.2% against January-October 2021, to about USD 4.2 billion, whereas imports reached USD 6.8 billion, an increase of 63.5% compared to the same period one year earlier. The bulk of Armenian exports were mining industry products (slightly above 20%) and precious and semi-precious stones and metals (18.5%).

 
Foreign Trade Values 20182019202020212022
Imports of Goods (million USD) 4,9635,5144,5595,3578,769
Exports of Goods (million USD) 2,4122,6402,5443,0235,360
Imports of Services (million USD) 2,1922,5219811,3382,547
Exports of Services (million USD) 2,2022,4341,0991,7354,177

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20182019202020212022
Foreign Trade (in % of GDP) 92.596.169.579.298.4
Trade Balance (million USD) -1,763-1,722-1,382-1,505-1,859
Trade Balance (Including Service) (million USD) -1,753-1,809-1,264-1,108-148
Imports of Goods and Services (Annual % Change) 13.311.6-31.512.933.8
Exports of Goods and Services (Annual % Change) 5.016.0-33.516.654.4
Imports of Goods and Services (in % of GDP) 53.154.839.743.850.7
Exports of Goods and Services (in % of GDP) 39.441.429.835.347.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) 21.98.24.75.45.2
Volume of imports of goods and services (Annual % change) 28.37.35.86.57.6

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Among others, Armenia is member of the Commonwealth of Independent States (CIS), of the Conference on Security and Cooperation in Europe (CSCE), of the World Bank etc.  
 

Main Partner Countries

Main Customers
(% of Exports)
2022
United Arab Emirates 10.1%
China 7.0%
Switzerland 4.8%
Netherlands 4.0%
Bulgaria 3.9%
See More Countries 70.2%
Main Suppliers
(% of Imports)
2022
China 15.4%
Germany 4.6%
United States 4.1%
Italy 3.2%
Türkiye 3.0%
See More Countries 69.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Vahagn KHACHATURYAN (since 13 March 2022) - independent
Prime Minister: Nikol PASHINYAN (since 10 September 2021) - Civil Contract
Next Election Dates
Presidential: 2029
National Assembly: June 2026
Main Political Parties
There are numerous political parties in Armenia. The main parties/alliances are:

- 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.

Executive Power
The President of Armenia is the chief of the state and holds the highest executive powers. He is indirectly elected for a 7-year term.
The Prime Minister is the head of government and holds most of the executive power. He is elected by majority vote by the National Assembly.
Legislative Power
The legislative branch in Armenia is composed of a unicameral National Assembly (Parliament). Members are elected in single-seat constituencies by proportional representation vote for a five-year term. The minimum number of seats is 101; there are currently 107 members.
 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) undertaken by the Armenian government, please consult the section dedicated to Armenia in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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