Armenia flag Armenia: Economic and Political Overview

The economic context of Armenia

Economic Indicators

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 organisations, 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 reduced growth to a negative rate of 7.6% of GDP in 2020, reflecting the reliance on remittances. According to the IMF's latest estimates, GDP returned to growth in 2021 (+6.5%), driven by private consumption (about 80% of GDP), thanks to an increase in household income and remittances. Growth is expected to stabilize around 4.5% this year and the next (IMF).

According to IMF data, public debt represented 62.2% of GDP in 2021, much higher than the pre-pandemic level (50.1%). As the economy recovers, the ratio should gradually decrease to 60.1% this year and 58% in 2023. Despite the recovery in domestic activity, the budget deficit moderated only marginally in 2021 (-5.3% of GDP), thanks to robust exports and remittances. Inflation has been rising rapidly since the end of 2020 and stood well above the target of 4% (6.9% - IMF), due to the impact of the depreciation of the dram and the rise in commodity prices. Consequently, the CBA's key interest rate reached 7.25% in September 2021, marking an increase of 300 basis points since December 2020. This should contribute to a marginal decrease in 2022 (5.8%) and 2023 (4.6% - IMF). Economic challenges include low agricultural yields, dependence on Russia for exports and remittances, rising inflation, and high oil prices. Other significant challenges include geographic isolation, lack of infrastructure and a highly dollarized economy.

The unemployment rate increased to 18.5% in 2021. The IMF expects the unemployment trend to decrease slightly to 18.3% in 2022 and 17.8% in 2023. The latest figures from the World Bank show that the national poverty rate is estimated at 44%, while the GDP per capita (PPP) stood at USD 13,638 as of 2021.

Main Indicators 20202021202220232024
GDP (billions USD) 12.6413.9317.6919.4620.99
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 4,2674,7015,9726,5687,083
General Government Gross Debt (in % of GDP) 63.560.252.352.953.0
Inflation Rate (%)
Unemployment Rate (% of the Labour Force) 18.115.315.215.114.9
Current Account (billions USD) -0.48-0.51-0.97-0.99-1.05
Current Account (in % of GDP) -3.8-3.7-5.5-5.1-5.0

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Armenia's economy is based on agriculture, mineral exploitation, hydroelectricity, telecommunications, jewellery, and tourism. Agriculture represents 11.2% 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 2021 total cereal output was forecast at about 208,000 tonnes, almost 30% below the average level; with the production of wheat (at about 120,000 tonnes) well below the five year average. This was due to a gradual reduction in planted areas that almost halved since 2015.

The industry contributes 27% of GDP and employs 17.5% 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 12.4% of GDP (World Bank). According to official government data, the industrial output in January-November 2021 grew by 2.7% year-on-year to a little more than AMD 2.1 trillion.

Services represent 53.2% of GDP and employ 51.2% of the active population. The sector includes jewelry (particularly because of the size of its diamonds) and tourism. Banking, in particular, has grown: it is considered a solid and stable sector and is composed of 17 commercial banks (European Banking Federation). As the Covid-19 pandemic has severely affected the tourism sector, the EU announced a call for proposals to support Armenia's tourism industry. Nevertheless, the number of foreign tourists visiting Armenia in the first half of 2021 dropped to 239,263 from 307,590 who had visited the country in the same period one year earlier, according to the latest figures by the National Statistical Committee (NSC).

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 24.0 24.8 51.2
Value Added (in % of GDP) 11.3 26.6 52.8
Value Added (Annual % Change) -0.6 3.4 6.9

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


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.}}

World Rank:
Regional Rank:

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


Country Risk

See the country risk analysis provided by Coface.

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Latest Update: March 2023

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