Armenia: Economic and Political Overview
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 Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 24.09 | 25.25 | 26.58 | 27.42 | 28.94 |
| GDP (Constant Prices, Annual % Change) | 8.3 | 6.0 | 4.9 | 4.5 | 4.5 |
| GDP per Capita (USD) | 8,126 | 8,518 | 8,965 | 9,247 | 9,760 |
| General Government Gross Debt (in % of GDP) | 50.7 | 52.4 | 55.6 | 56.6 | 57.4 |
| Inflation Rate (%) | 2.0 | 0.2 | 3.1 | 4.0 | 4.0 |
| Unemployment Rate (% of the Labour Force) | 12.6 | 13.0 | 13.5 | 14.0 | 14.0 |
| Current Account (billions USD) | -0.56 | -1.07 | -1.27 | -1.37 | -1.44 |
| Current Account (in % of GDP) | -2.3 | -4.2 | -4.8 | -5.0 | -5.0 |
Source: IMF – World Economic Outlook Database, October 2021
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. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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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
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