Economic Outline

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.

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