From 1914 through 1921, Caucasian Armenia suffered from genocide of about 1.5 million Armenian inhabitants on their own homeland which obviously caused total property and financial collapse when all their assets and belongings were forcibly taken away by the Turks the consequences of which after 105 years to this day remain incalculable, revolution, the influx of refugees from Turkish Armenia, disease, hunger and economic misery.
However, after the mass killings of Armenian intellectuals in April of 1915 and the genocide targeted towards the whole Armenian population left the people and the country in ruins.
About 200,000 people died in 1919 alone.
By 1926 agricultural production in Armenia had reached nearly three-quarters of its prewar level. By the end of the 1920s, Stalin's regime had revoked the NEP and reestablished the state monopoly on all economic activity.
From 1914 through 1921, Caucasian Armenia suffered from genocide of about 1.5 million Armenian inhabitants on their own homeland which obviously caused total property and financial collapse when all their assets and belongings were forcibly taken away by the Turks the consequences of which after 105 years to this day remain incalculable, revolution, the influx of refugees from Turkish Armenia, disease, hunger and economic misery.
This first experiment of state control ended with the advent of Soviet leader Vladimir Lenin's New Economic Policy (NEP) of 1921–27.
By 1926 agricultural production in Armenia had reached nearly three-quarters of its prewar level. By the end of the 1920s, Stalin's regime had revoked the NEP and reestablished the state monopoly on all economic activity.
Between 1929 and 1939, the percentage of Armenia's work force categorised as industrial workers grew from 13% to 31%.
From the 1930s through the 1960s, an industrial infrastructure has been constructed.
Highly integrated and sheltered within artificial barter economy of the Soviet system from the 1930s until the end of the communist era, the Armenian economy showed few signs of self-sufficiency at any time during that period.
By 1935 industry supplied 62% of Armenia's economic production.
Between 1929 and 1939, the percentage of Armenia's work force categorised as industrial workers grew from 13% to 31%.
From the 1930s through the 1960s, an industrial infrastructure has been constructed.
In large part due to the earthquake of 1988, the Azerbaijani blockade that began in 1989 and the collapse of the international trading system of the Soviet Union, the Armenian economy of the early 1990s remained far below its 1980 production levels.
In the first years of independence (1992–93), inflation was extremely high, productivity and national income dropped dramatically, and the national budget ran large deficits. ===Post-communist economic reforms=== Armenia introduced elements of the free market and privatisation into their economic system in the late 1980s, when Mikhail Gorbachev began advocating economic reform.
In the late 1980s, much of Armenia's economy already was opening either semi-officially or illegally, with widespread corruption and bribery.
In 1988 Armenia produced only 0.9% of the net material product of the Soviet Union (1.2% of industry, 0.7% of agriculture).
In large part due to the earthquake of 1988, the Azerbaijani blockade that began in 1989 and the collapse of the international trading system of the Soviet Union, the Armenian economy of the early 1990s remained far below its 1980 production levels.
When the December 1988 earthquake brought millions of dollars of foreign aid to the devastated regions of Armenia, much of the money went to corrupt and criminal elements. Beginning in 1991, the democratically elected government pushed vigorously for privatisation and market relations, although its efforts were frustrated by the old ways of doing business in Armenia, the Azerbaijani blockade, and the costs of the First Nagorno-Karabakh War.
In addition, the effects of the 1988 earthquake, which killed more than 25,000 people and made 500,000 homeless, are still being felt.
In large part due to the earthquake of 1988, the Azerbaijani blockade that began in 1989 and the collapse of the international trading system of the Soviet Union, the Armenian economy of the early 1990s remained far below its 1980 production levels.
In 1992–93, the GDP had fallen nearly 60% from its 1989 level.
The ongoing conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh (which was part of Soviet Azerbaijan) and the breakup of the centrally directed economic system of the former Soviet Union contributed to a severe economic decline in the early 1990s.
As the republic's economy faced the prospects of competing in world markets in the mid 1990s, the great liabilities of Armenia's industry were its outdated equipment and infrastructure and the pollution emitted by many of the country's heavy industrial plants. In 1991, Armenia's last year as a Soviet republic, national income fell 12% from the previous year, while per capita gross national product was 4,920 rubles, only 68% of the Soviet average.
In large part due to the earthquake of 1988, the Azerbaijani blockade that began in 1989 and the collapse of the international trading system of the Soviet Union, the Armenian economy of the early 1990s remained far below its 1980 production levels.
==Natural environment protection== In Armenia carbon dioxide emissions amounted to 1.9 tonnes per capita in 2014, less than in its neighbouring countries. Armenia's greenhouse gas emissions decreased 62% from 1990 to 2013, averaging -1.3% annually. Armenia is working on addressing its environmental problems.
Since the implosion of the USSR in December 1991, Armenia has switched to small-scale agriculture away from the large agroindustrial complexes of the Soviet era.
Besides hydroelectric plants and canals, roads were built and gas pipelines were laid to bring fuel and food from Azerbaijan and Russia. The Stalinist command economy, in which market forces were suppressed and all orders for production and distribution came from the state authorities, survived in all its essential features until the fall of the Soviet regime in 1991.
The republic retained 1.4% of total state budget revenue, delivered 63.7% of its NMP to other republics, and exported only 1.4% of what it produced to markets outside the Soviet Union. Agriculture accounted for only 20% of net material product and 10% of employment before the breakup of the Soviet Union in 1991. Armenia's industry was especially dependent on the Soviet military-industrial complex.
As the republic's economy faced the prospects of competing in world markets in the mid 1990s, the great liabilities of Armenia's industry were its outdated equipment and infrastructure and the pollution emitted by many of the country's heavy industrial plants. In 1991, Armenia's last year as a Soviet republic, national income fell 12% from the previous year, while per capita gross national product was 4,920 rubles, only 68% of the Soviet average.
When the December 1988 earthquake brought millions of dollars of foreign aid to the devastated regions of Armenia, much of the money went to corrupt and criminal elements. Beginning in 1991, the democratically elected government pushed vigorously for privatisation and market relations, although its efforts were frustrated by the old ways of doing business in Armenia, the Azerbaijani blockade, and the costs of the First Nagorno-Karabakh War.
Thus, the Armenian government should take care that unemployed women can find jobs and become taxpayers. ===Migrant workers=== Since gaining independence in 1991, hundreds of thousands of Armenia's residents have gone abroad, mainly to Russia, in search of work.
In 1992, the Law on the Programme of Privatisation and Decentralisation of Incompletely Constructed Facilities established a state privatisation committee, with members from all political parties.
Besides a toy factory and construction projects, diaspora Armenians built a cold storage plant (which in its first years had little produce to store) and established the American University of Armenia in Yerevan to teach the techniques necessary to run a market economy. Armenia was admitted to the International Monetary Fund in May 1992 and to the World Bank in September.
In 1992–93, the GDP had fallen nearly 60% from its 1989 level.
In middle 1993, the committee announced a two-year privatisation programme, whose first stage would be privatisation of 30% of state enterprises, mostly services and light industries.
Only in late 1993 was a department of foreign investment established in the Ministry of Economy, to spread information about Armenia's investment opportunities and improve the legal infrastructure for investment activity.
Although privatisation had slowed because of catastrophic collapse of the economy, Prime Minister Hrant Bagratyan informed the United States officials in the fall of 1993 that plans had been made to embark on a renewed privatisation programme by the end of the year. Like other former states, Armenia's economy suffers from the legacy of a centrally planned economy and the breakdown of former Soviet trading patterns.
The national currency, the dram, suffered hyperinflation for the first few years after its introduction in 1993. Armenia has registered strong economic growth since 1995 and inflation has been negligible for the past several years.
Total loans extended to Armenia since 1993 exceed $800 million.
Although a cease-fire has held since 1994, the conflict with Azerbaijan over Nagorno-Karabakh has not been resolved.
These loans are targeted at reducing the budget deficit, stabilizing the local currency; developing private businesses; energy; the agriculture, food processing, transportation, and health and education sectors; and ongoing rehabilitation work in the earthquake zone. By 1994, however, the Armenian government had launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates in 1995–2005.
The national currency, the dram, suffered hyperinflation for the first few years after its introduction in 1993. Armenia has registered strong economic growth since 1995 and inflation has been negligible for the past several years.
These loans are targeted at reducing the budget deficit, stabilizing the local currency; developing private businesses; energy; the agriculture, food processing, transportation, and health and education sectors; and ongoing rehabilitation work in the earthquake zone. By 1994, however, the Armenian government had launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates in 1995–2005.
Also, the average market value of one square meter of housing in apartment buildings in Yerevan in September 2019 grew by 10.8% from September 2018. In 2017 construction output increased by 2.2% reaching 416 billion AMD. Armenia experienced a construction boom during the latter part of the 2000s.
In 2005, Armenia's industrial output (including electricity) made up about 30 percent of GDP. ===Services sector=== In the 2000s, along with the construction sector, the services sector was the driving force behind Armenia's recent high economic growth rate. ====Retail trade==== In 2010, retail trade turnover was largely unaltered compared to 2009.
The warning was echoed by the International Monetary Fund. ====Takeover of Armenian industrial property by the Russian state and Russian companies==== Since 2000, the Russian state has acquired several key assets in the energy sector and Soviet-era industrial plants.
At the same time it estimates in 2019 that 60% of workers are employed in informal economy. World Bank research also reveals that employment rate fell in years 2000–2015 in middle- and low-skill occupations, while it grew high-skill occupations. See also Statistical Committee of Armenia publication (in English) "Labour market in the Republic of Armenia, 2018". === Female Unemployment in Armenia === Worldwide, women's unemployment rate is higher than men's by approximately 0.8% and equals 6%.
According to estimates by the National Statistical Survey, the rate of labor emigration was twice as higher in 2001 and 2002. According to an OSCE survey, a typical Armenian migrant worker is a married man aged between 41 and 50 years who "began looking for work abroad at the age of 32-33." For Armenians, another feature of migration was an increase in a variety of threats.
The electricity distribution system was privatized in 2002. ==Outperforming GDP growth== According to official preliminary data GDP grew by 7.6 per cent in 2019, largest recording growth since 2008. GDP per capita was approximately $4,280 in 2018 and is expected to reach $4604 in 2019.
OSCE experts estimate that between 116,000 and 147,000 people left Armenia for economic reasons between 2002 and 2004, with two-thirds of them returning home by February 2005.
According to estimates by the National Statistical Survey, the rate of labor emigration was twice as higher in 2001 and 2002. According to an OSCE survey, a typical Armenian migrant worker is a married man aged between 41 and 50 years who "began looking for work abroad at the age of 32-33." For Armenians, another feature of migration was an increase in a variety of threats.
Armenia joined the World Trade Organization (WTO) in January 2003.
The study explored Armenia's trade flows to 139 countries for the period of 2003 to 2007.
OSCE experts estimate that between 116,000 and 147,000 people left Armenia for economic reasons between 2002 and 2004, with two-thirds of them returning home by February 2005.
In 2005, Armenia's industrial output (including electricity) made up about 30 percent of GDP. ===Services sector=== In the 2000s, along with the construction sector, the services sector was the driving force behind Armenia's recent high economic growth rate. ====Retail trade==== In 2010, retail trade turnover was largely unaltered compared to 2009.
According to the Central Bank of Armenia, in 2005, cash remittances from Armenians working abroad reached a record-high level of $1 billion, which is worth more than one fifth of the country's 2005 GDP. === Banking === The central bank has set additional capital buffers in the banking sector.
OSCE experts estimate that between 116,000 and 147,000 people left Armenia for economic reasons between 2002 and 2004, with two-thirds of them returning home by February 2005.
In 2006, the agricultural sector accounted for about 20 percent of Armenia's GDP. Armenia's agricultural output dropped by 17.9 percent in the period of January–September 2010.
During the first 11 months of 2006, the European Union remained Armenia's largest trading partner, accounting for 34.4 percent of its $2.85 billion commercial exchange during the 11-month period. ====Russia and former Soviet republics==== In first quarter of 2019 share of Russia in foreign trade turnover fell to 11% from 29% in previous year. 2017 CIS countries accounted for 30 percent of Armenia's foreign trade.
During the first 11 months of 2006, the volume of Armenia's trade with Russia was $376.8 million or 13.2 percent of the total commercial exchange. ====China==== In 2017 trade with China grew by 33.3 percent. As of early 2011, trade with China is dominated by imports of Chinese goods and accounts for about 10 percent of Armenia's foreign trade.
An increase in Armenia's exports to the US in 2009 and 2010 has been due to shipments of aluminum foil. During the first 11 months of 2006, U.S.-Armenian trade totaled $152.6 million. ====Georgia==== The volume of Georgian-Armenian trade remains modest in both relative and absolute terms.
It was controversially shut down by the Russian authorities in June 2006, at the height of a Russian-Georgian spy scandal.
In contrast it grew by 7.6 per cent in 2019, the largest recorded growth since 2007, while between 2012 and 2018 GDP grew 40.7%, and key banking indicators like assets and credit exposures almost doubled. Until independence, Armenia's economy was based largely on industry—chemicals, electronic products, machinery, processed food, synthetic rubber and textiles; it was highly dependent on outside resources.
According to the National Statistical Service, Armenia's booming construction sector generated about 20 percent of Armenia's GDP during the first eight months of 2007.
According to the National Statistical Service, during the January–August 2007 period, Armenia's industrial sector was the single largest contributor to the country's GDP, but remained largely stagnant with industrial output increasing only by 1.7 percent per year.
According to RFE/RL, comparable sums are believed to be transferred through non-bank systems, implying that cash remittances make up approximately 30 percent of Armenia's GDP in the first half of 2008. In 2007, cash remittances through bank transfers rose by 37 percent to a record-high level of US$1.32 billion.
The study explored Armenia's trade flows to 139 countries for the period of 2003 to 2007.
Imports from EU countries increased by 17.1 percent, constituting 22.5 percent of all imports. During January–February 2007, Armenia's trade with the European Union totaled $200 million.
Exports to CIS countries rose by 40,3% to $579,5 million. Bilateral trade with Russia stood at more than $700 million for the first nine months of 2010 – on track to rebound to $1 billion mark first reached in 2008 prior to the global economic crisis. During January–February 2007, Armenia's trade with Russia and other former Soviet republics was $205.6 million (double the amount from the same period the previous year), making them the country's number one trading partner.
The electricity distribution system was privatized in 2002. ==Outperforming GDP growth== According to official preliminary data GDP grew by 7.6 per cent in 2019, largest recording growth since 2008. GDP per capita was approximately $4,280 in 2018 and is expected to reach $4604 in 2019.
They help Armenia sustain double-digit economic growth and finance its massive trade deficit. In 2008 transfers reached record high of $2.3 billion.
Since private transfers from the Diaspora tend to be mostly injected into consumption of imports and not in high value-added sectors, the transfers have not resulted in sizeable increases in productivity. According to the Central Bank of Armenia, during the first half of 2008, cash remittances sent back to Armenia by Armenians working abroad rose by 57.5 percent and totaled US$668.6 million, equivalent to 15 percent of the country's first-half Gross Domestic Product.
According to RFE/RL, comparable sums are believed to be transferred through non-bank systems, implying that cash remittances make up approximately 30 percent of Armenia's GDP in the first half of 2008. In 2007, cash remittances through bank transfers rose by 37 percent to a record-high level of US$1.32 billion.
Micro business will be exempted from all types of taxes other than income tax, which will be 5 thousand drams per employee. ====Value-added tax==== Over half of the tax revenues in the January–August 2008 time period were generated from value-added taxes (VAT) of 20%.
Exports to CIS countries rose by 40,3% to $579,5 million. Bilateral trade with Russia stood at more than $700 million for the first nine months of 2010 – on track to rebound to $1 billion mark first reached in 2008 prior to the global economic crisis. During January–February 2007, Armenia's trade with Russia and other former Soviet republics was $205.6 million (double the amount from the same period the previous year), making them the country's number one trading partner.
"Lfik Samo") and close to the country's leadership.). According to one analyst, Armenia's economic system in 2008 was anticompetitive due to the structure of the economy being a type of "monopoly or oligopoly".
Construction of these was funded by foreign aid and costed about 1.3 billion AMD. ====Non-transparent deals==== Critics of the Robert Kocharyan government (in office until 2008) say that the Armenian administration never considered alternative ways of settling the Russian debts.
For example, pro-Western Ukraine and Georgia (both of which owe Russia more than Armenia) have managed to reschedule repayment of their debts. ==Transportation routes and energy lines== ===Internal=== Since early 2008, Armenia's entire rail network is managed by the Russian state railway under brand South Caucasus Railways. ===Through Georgia=== Russian natural gas reaches Armenia via a pipeline through Georgia. The only operational rail link into Armenia is from Georgia.
An oil pipeline to pump Iranian oil products is also in the planning stages. As of October 2008, the Armenian government was considering implementing an ambitious project to build a railway to Iran.
Economic analysts say that the project would cost at least $1 billion (equivalent to about 40 percent of Armenia's 2008 state budget).
According to a World Bank official, 30 percent of Armenia's economy in 2009 came from the construction sector. However, during the January to September 2010 period, the sector experienced a 5.2 percent year-on-year decrease, which according to the Civilitas Foundation is an indication of the unsustainability of a sector based on an elite market, with few products for the median or low budgets.
In 2005, Armenia's industrial output (including electricity) made up about 30 percent of GDP. ===Services sector=== In the 2000s, along with the construction sector, the services sector was the driving force behind Armenia's recent high economic growth rate. ====Retail trade==== In 2010, retail trade turnover was largely unaltered compared to 2009.
According to CBA their impact on economy is decreasing, as GDP grows at outperforming rate. Net private transfers decreased in 2009, but saw a continuous increase during the first six months of 2010.
In the first nine months of 2010, imports grew about 19 percent, just about equal to the decline of the same sector in 2009. ====Deficit==== According to the National Statistical Service foreign trade deficit amounted to US$1.94 billion in 2017. The current account deficit represented 2.4 percent of GDP in 2017 and increased up to 8.1 percent of GDP during the first three quarters of 2018.
In January 2021, Iran's finance minister Farhad Dejpasand said that trade between the two countries could reach $1 billion annually as Iran looks to become a regional economic force. ====United States==== From January–September 2010, bilateral trade with the United States measured approximately $150 million, on track for about a 30 percent increase over 2009.
An increase in Armenia's exports to the US in 2009 and 2010 has been due to shipments of aluminum foil. During the first 11 months of 2006, U.S.-Armenian trade totaled $152.6 million. ====Georgia==== The volume of Georgian-Armenian trade remains modest in both relative and absolute terms.
The Compact also includes a $146 million project to increase the productivity of approximately 250,000 farm households through improved water supply, higher yields, higher-value crops, and a more competitive agricultural sector. In 2010, the volume of US assistance to Armenia remained near 2009 levels; however, longer-term decline continued.
In the same period unemployment rate of economically active population dropped from 20.8% to 20.4%. According to World Bank data unemployment ratio in 2017 reached 18.19%, and was nearly unchanged since 2009.
In 2006, the agricultural sector accounted for about 20 percent of Armenia's GDP. Armenia's agricultural output dropped by 17.9 percent in the period of January–September 2010.
According to a World Bank official, 30 percent of Armenia's economy in 2009 came from the construction sector. However, during the January to September 2010 period, the sector experienced a 5.2 percent year-on-year decrease, which according to the Civilitas Foundation is an indication of the unsustainability of a sector based on an elite market, with few products for the median or low budgets.
In 2005, Armenia's industrial output (including electricity) made up about 30 percent of GDP. ===Services sector=== In the 2000s, along with the construction sector, the services sector was the driving force behind Armenia's recent high economic growth rate. ====Retail trade==== In 2010, retail trade turnover was largely unaltered compared to 2009.
2018 saw a record high of over 1.6 million inbound tourists. In 2018 receipts from international tourism amounted to $1.2 billion, nearly twice the value for 2010.
According to CBA their impact on economy is decreasing, as GDP grows at outperforming rate. Net private transfers decreased in 2009, but saw a continuous increase during the first six months of 2010.
In the first nine months of 2010, imports grew about 19 percent, just about equal to the decline of the same sector in 2009. ====Deficit==== According to the National Statistical Service foreign trade deficit amounted to US$1.94 billion in 2017. The current account deficit represented 2.4 percent of GDP in 2017 and increased up to 8.1 percent of GDP during the first three quarters of 2018.
Whereby exports to EU countries grew by 32,2% to $633 million. In 2010, EU countries accounted for 32.1 percent of Armenia's foreign trade.
Armenian exports to EU countries have skyrocketed by 65.9 percent, making up more than half of all 2010 January to September exports.
Exports to CIS countries rose by 40,3% to $579,5 million. Bilateral trade with Russia stood at more than $700 million for the first nine months of 2010 – on track to rebound to $1 billion mark first reached in 2008 prior to the global economic crisis. During January–February 2007, Armenia's trade with Russia and other former Soviet republics was $205.6 million (double the amount from the same period the previous year), making them the country's number one trading partner.
The volume of Chinese-Armenian trade soared by 55 percent to $390 million in January–November 2010.
The number of Iranian tourists has risen in recent years, with an estimated 80,000 Iranian tourists in 2010.
In January 2021, Iran's finance minister Farhad Dejpasand said that trade between the two countries could reach $1 billion annually as Iran looks to become a regional economic force. ====United States==== From January–September 2010, bilateral trade with the United States measured approximately $150 million, on track for about a 30 percent increase over 2009.
An increase in Armenia's exports to the US in 2009 and 2010 has been due to shipments of aluminum foil. During the first 11 months of 2006, U.S.-Armenian trade totaled $152.6 million. ====Georgia==== The volume of Georgian-Armenian trade remains modest in both relative and absolute terms.
According to official Armenian statistics, it rose by 11 percent to $91.6 million in January–November 2010.
The figure was equivalent to just over 2 percent of Armenia's overall foreign trade. ====Turkey==== In 2010, the volume of bilateral trade with Turkey was about $200 million, with trade taking place across Georgian territory.
The Compact also includes a $146 million project to increase the productivity of approximately 250,000 farm households through improved water supply, higher yields, higher-value crops, and a more competitive agricultural sector. In 2010, the volume of US assistance to Armenia remained near 2009 levels; however, longer-term decline continued.
As of 2010, the project has been continuously delayed, with the rail link estimated to cost as much as $4 billion and stretch .
In June 2010, Transport Minister Manuk Vartanian revealed that Yerevan is seeking as much as $1 billion in loans from China to finance the railway's construction. === Through Turkey and Azerbaijan === The closing of the border by Turkey has cut Armenia's rail link between Gyumri and Kars to Turkey; the rail link with Iran through the Azeri exclave of Nakhichevan; and a natural gas and oil pipeline line with Azerbaijan.
During the first 11 months of 2006, the volume of Armenia's trade with Russia was $376.8 million or 13.2 percent of the total commercial exchange. ====China==== In 2017 trade with China grew by 33.3 percent. As of early 2011, trade with China is dominated by imports of Chinese goods and accounts for about 10 percent of Armenia's foreign trade.
Instead, the irrigated agriculture project was headed for completion with apparently no prospects for extension beyond 2011. On May 8, 2019, conditioned with the political events in Armenia since April 2018, United States Agency for International Development signed an extension of U.S.-Armenia bilateral agreement in the area of governance and public administration, which would add additional US$8.5 million to the agreement.
From 2011 to 2013, the European Union is expected to advance at least €157.3 million ($208 million) in aid to Armenia. ==Domestic business environment== Since transition of power to new leadership in 2018 Armenian government works on improving domestic business environment.
Its members cannot be dismissed by the government. ===Foreign trade facilitation=== In June 2011, Armenia adopted a Law on Free Economic Zones (FEZ), and developed several key regulations at the end of 2011 to attract foreign investments into FEZs: exemptions from VAT (value added tax), profit tax, customs duties, and property tax. The “Alliance” FEZ was opened in August 2013, and currently has nine businesses taking advantage of its facilities.
In contrast it grew by 7.6 per cent in 2019, the largest recorded growth since 2007, while between 2012 and 2018 GDP grew 40.7%, and key banking indicators like assets and credit exposures almost doubled. Until independence, Armenia's economy was based largely on industry—chemicals, electronic products, machinery, processed food, synthetic rubber and textiles; it was highly dependent on outside resources.
In addition, the share of agriculture in Armenia's GDP hovered around 17.9% until 2012 according to the World Bank.
During the last five years the imports of Armenia have decreased at an annualized rate of -1.2%, from $3.82B in 2012 to $3.96B in 2017.
Then already in 2013 the share of it was a bit higher comprising 18.43%.
Afterwards a declining trend was registered in the period of 2013-2017 reaching to around 14.90% in 2017.
From 2011 to 2013, the European Union is expected to advance at least €157.3 million ($208 million) in aid to Armenia. ==Domestic business environment== Since transition of power to new leadership in 2018 Armenian government works on improving domestic business environment.
Its members cannot be dismissed by the government. ===Foreign trade facilitation=== In June 2011, Armenia adopted a Law on Free Economic Zones (FEZ), and developed several key regulations at the end of 2011 to attract foreign investments into FEZs: exemptions from VAT (value added tax), profit tax, customs duties, and property tax. The “Alliance” FEZ was opened in August 2013, and currently has nine businesses taking advantage of its facilities.
==Natural environment protection== In Armenia carbon dioxide emissions amounted to 1.9 tonnes per capita in 2014, less than in its neighbouring countries. Armenia's greenhouse gas emissions decreased 62% from 1990 to 2013, averaging -1.3% annually. Armenia is working on addressing its environmental problems.
In 2014 the government expanded operations in the Alliance FEZ to include industrial production as long as there is no similar production already occurring in Armenia. In 2015, another “Meridian” FEZ, focused on jewelry production, watch-making, and diamond-cutting opened in Yerevan, with six businesses operating in it.
==Natural environment protection== In Armenia carbon dioxide emissions amounted to 1.9 tonnes per capita in 2014, less than in its neighbouring countries. Armenia's greenhouse gas emissions decreased 62% from 1990 to 2013, averaging -1.3% annually. Armenia is working on addressing its environmental problems.
In 2015 they reached 10-year low at $1.6 billion.
Armenian exports to China, though still modest in absolute terms, nearly doubled in that period. ====Iran==== Armenia's trade with Iran grew significantly from 2015 and 2020.
In 2014 the government expanded operations in the Alliance FEZ to include industrial production as long as there is no similar production already occurring in Armenia. In 2015, another “Meridian” FEZ, focused on jewelry production, watch-making, and diamond-cutting opened in Yerevan, with six businesses operating in it.
At the same time, it established that in case of force majeure situations such as natural disasters, wars, the government will be allowed to exceed this threshold. The debt rose by $863.5 million in 2016 and by another $832.5 million in 2017.
Armenia's main imports partners are Russia, China, Ukraine, Iran, Germany, Italy, Turkey, France and Japan. Imports in 2017 amounted to $4.183 billion, up 27.8% from 2016. IMF expects exports to grow at a rate of 4-5% p.a.
In terms of GDP per capita IMF expects Armenia to surpass neighboring Georgia in 2019 and neighboring Azerbaijan in 2020. With 8.3% Armenia recorded highest degree of GDP growth among Eurasian Economic Union countries in 2018 January–June against the same period of 2017. Earlier, the economy of Armenia grew by 7.5% in 2017 and reached a nominal GDP of $11.5 billion per annum, while per capita figure grew by 10.1% and reached $3880.
Afterwards a declining trend was registered in the period of 2013-2017 reaching to around 14.90% in 2017.
Also, the average market value of one square meter of housing in apartment buildings in Yerevan in September 2019 grew by 10.8% from September 2018. In 2017 construction output increased by 2.2% reaching 416 billion AMD. Armenia experienced a construction boom during the latter part of the 2000s.
At the same time, it established that in case of force majeure situations such as natural disasters, wars, the government will be allowed to exceed this threshold. The debt rose by $863.5 million in 2016 and by another $832.5 million in 2017.
Meanwhile, exports to Russia, Germany, USA and UAE dropped. ====Imports==== In 2017 Armenia imported $3.96B, making it the 133rd largest importer in the world.
During the last five years the imports of Armenia have decreased at an annualized rate of -1.2%, from $3.82B in 2012 to $3.96B in 2017.
Armenia's main imports partners are Russia, China, Ukraine, Iran, Germany, Italy, Turkey, France and Japan. Imports in 2017 amounted to $4.183 billion, up 27.8% from 2016. IMF expects exports to grow at a rate of 4-5% p.a.
In the first nine months of 2010, imports grew about 19 percent, just about equal to the decline of the same sector in 2009. ====Deficit==== According to the National Statistical Service foreign trade deficit amounted to US$1.94 billion in 2017. The current account deficit represented 2.4 percent of GDP in 2017 and increased up to 8.1 percent of GDP during the first three quarters of 2018.
This was a result of about 8 percent increase in goods export and 21 percent increase on goods import in nominal terms year on year in 2018. ===Partners=== ====European Union==== In 2017 EU countries accounted for 24.3 percent of Armenia's foreign trade.
During the first 11 months of 2006, the volume of Armenia's trade with Russia was $376.8 million or 13.2 percent of the total commercial exchange. ====China==== In 2017 trade with China grew by 33.3 percent. As of early 2011, trade with China is dominated by imports of Chinese goods and accounts for about 10 percent of Armenia's foreign trade.
This figure is not expected to increase significantly so long as the land border between the Armenia and Turkey remains closed. ===Foreign direct investments=== ====Yearly FDI figures==== Despite robust economic growth foreign direct investment (FDI) in Armenia remain low as of 2018. in January–September 2019, the net flow of direct foreign investment in the real sector of the Armenian economy stood at about $267 million. Jersey was the main source of FDI in 2017.
This however does not match survey data published by the Statistical Committee of Armenia, according to which in 4th quarter of 2018 there were 870.1 thousand persons employed against 896.7 thousand employed persons in 4th quarter of 2017.
In the same period unemployment rate of economically active population dropped from 20.8% to 20.4%. According to World Bank data unemployment ratio in 2017 reached 18.19%, and was nearly unchanged since 2009.
In 2017, the National Statistical Service of Armenia stated that more than 60% of officially registered unemployed people in Armenia are women.
In contrast it grew by 7.6 per cent in 2019, the largest recorded growth since 2007, while between 2012 and 2018 GDP grew 40.7%, and key banking indicators like assets and credit exposures almost doubled. Until independence, Armenia's economy was based largely on industry—chemicals, electronic products, machinery, processed food, synthetic rubber and textiles; it was highly dependent on outside resources.
This is expected to change after the 2018 Armenian revolution. ==Overview== Under the old Soviet central planning system, Armenia had developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics in exchange for raw materials and energy.
The electricity distribution system was privatized in 2002. ==Outperforming GDP growth== According to official preliminary data GDP grew by 7.6 per cent in 2019, largest recording growth since 2008. GDP per capita was approximately $4,280 in 2018 and is expected to reach $4604 in 2019.
In terms of GDP per capita IMF expects Armenia to surpass neighboring Georgia in 2019 and neighboring Azerbaijan in 2020. With 8.3% Armenia recorded highest degree of GDP growth among Eurasian Economic Union countries in 2018 January–June against the same period of 2017. Earlier, the economy of Armenia grew by 7.5% in 2017 and reached a nominal GDP of $11.5 billion per annum, while per capita figure grew by 10.1% and reached $3880.
Also, the average market value of one square meter of housing in apartment buildings in Yerevan in September 2019 grew by 10.8% from September 2018. In 2017 construction output increased by 2.2% reaching 416 billion AMD. Armenia experienced a construction boom during the latter part of the 2000s.
2018 saw a record high of over 1.6 million inbound tourists. In 2018 receipts from international tourism amounted to $1.2 billion, nearly twice the value for 2010.
In 2018 they run at round $1.8 billion.
This suggests that tax collection in Armenia is improving at the expense of ordinary citizens, rather than wealthy citizens (who have been the main beneficiaries of Armenia's double-digit economic growth in recent years). ==Foreign trade, direct investments and aid== ===Foreign trade=== ====Exports==== According to the National Statistical Committee, in 2018, exports amounted to $2.411.9 billion, having grown by 7.8% from the previous year.IMF expects exports to grow at a rate of 5-8% p.a.
in years 2019–2024. The goods export structure changed considerably in 2018 as the export of the traditional mining sector decreased while the share of textiles, agriculture and precious metals increased. Geographical location of the country and relatively low electricity costs are comparative advantages supporting to boost the production of the textile and leather products in Armenia.
Moreover, authors stated that high exchange rate risk resulted in decreasing exports to Russia. According to most recent (2019 Jan-Feb compared to 2018 Jan-Feb) ArmStat calculations, biggest growth in export quantities was measured towards Turkmenistan by 23.6 times (from $37K to $912K), Estonia by 15 times (from $8.4K to $136.5K) and Canada by 11.5 times (from $623K to $7.8 mln).
In the first nine months of 2010, imports grew about 19 percent, just about equal to the decline of the same sector in 2009. ====Deficit==== According to the National Statistical Service foreign trade deficit amounted to US$1.94 billion in 2017. The current account deficit represented 2.4 percent of GDP in 2017 and increased up to 8.1 percent of GDP during the first three quarters of 2018.
This was a result of about 8 percent increase in goods export and 21 percent increase on goods import in nominal terms year on year in 2018. ===Partners=== ====European Union==== In 2017 EU countries accounted for 24.3 percent of Armenia's foreign trade.
This figure is not expected to increase significantly so long as the land border between the Armenia and Turkey remains closed. ===Foreign direct investments=== ====Yearly FDI figures==== Despite robust economic growth foreign direct investment (FDI) in Armenia remain low as of 2018. in January–September 2019, the net flow of direct foreign investment in the real sector of the Armenian economy stood at about $267 million. Jersey was the main source of FDI in 2017.
Instead, the irrigated agriculture project was headed for completion with apparently no prospects for extension beyond 2011. On May 8, 2019, conditioned with the political events in Armenia since April 2018, United States Agency for International Development signed an extension of U.S.-Armenia bilateral agreement in the area of governance and public administration, which would add additional US$8.5 million to the agreement.
From 2011 to 2013, the European Union is expected to advance at least €157.3 million ($208 million) in aid to Armenia. ==Domestic business environment== Since transition of power to new leadership in 2018 Armenian government works on improving domestic business environment.
The increase in unemployment rate mainly includes people who were left without work during the pandemic. According to prime minister Nikol Pashinyan in January 2019 562,043 payroll jobs were recorded, against of 511,902 in January 2018, an increase of 9.7%.Statistical Committee of Armenia publication based on data retrieved from employers and national income service cites 560,586 payroll positions in January 2019, an increase of 9.9% against previous year.
This however does not match survey data published by the Statistical Committee of Armenia, according to which in 4th quarter of 2018 there were 870.1 thousand persons employed against 896.7 thousand employed persons in 4th quarter of 2017.
For the whole year of 2018 Statistical Committee of Armenia survey counted 915.5 thousand employed persons, an increase of 1.4% against previous year.
In 2018, the ratio increased to 18.97% and slowly dropped to 18.81% in 2019.
At the same time it estimates in 2019 that 60% of workers are employed in informal economy. World Bank research also reveals that employment rate fell in years 2000–2015 in middle- and low-skill occupations, while it grew high-skill occupations. See also Statistical Committee of Armenia publication (in English) "Labour market in the Republic of Armenia, 2018". === Female Unemployment in Armenia === Worldwide, women's unemployment rate is higher than men's by approximately 0.8% and equals 6%.
In contrast it grew by 7.6 per cent in 2019, the largest recorded growth since 2007, while between 2012 and 2018 GDP grew 40.7%, and key banking indicators like assets and credit exposures almost doubled. Until independence, Armenia's economy was based largely on industry—chemicals, electronic products, machinery, processed food, synthetic rubber and textiles; it was highly dependent on outside resources.
The electricity distribution system was privatized in 2002. ==Outperforming GDP growth== According to official preliminary data GDP grew by 7.6 per cent in 2019, largest recording growth since 2008. GDP per capita was approximately $4,280 in 2018 and is expected to reach $4604 in 2019.
In terms of GDP per capita IMF expects Armenia to surpass neighboring Georgia in 2019 and neighboring Azerbaijan in 2020. With 8.3% Armenia recorded highest degree of GDP growth among Eurasian Economic Union countries in 2018 January–June against the same period of 2017. Earlier, the economy of Armenia grew by 7.5% in 2017 and reached a nominal GDP of $11.5 billion per annum, while per capita figure grew by 10.1% and reached $3880.
Also, the average market value of one square meter of housing in apartment buildings in Yerevan in September 2019 grew by 10.8% from September 2018. In 2017 construction output increased by 2.2% reaching 416 billion AMD. Armenia experienced a construction boom during the latter part of the 2000s.
Today people can easily get financial assistance from the banks right to their credit cards, without visiting the bank. ====Information and Communication Technologies==== As of February 2019 nearly 23 thousand employees were counted in ICT sector.
In per capita terms these stood at $413, ahead of Turkey and Azerbaijan, but behind Georgia. In 2019 the largest growth at 27.2% was shown by accommodation and catering sector, which came as a result of the growth of tourist flows. ==Financial system== ===Foreign debt=== In 2019, the Armenian government planned to obtain about $490 million in fresh loans rising public debt to about $7.5 billion.
$0.8 billion were transferred in first half of 2019.
In force since April 2019, the regulator set three buffers exceeding the current capital adequacy requirement compliant with the Basel III regulation: a capital conservation buffer, a counter-cyclical capital buffer and a systemic risk buffer.
Moreover, until 2023 the taxation rate will gradually decrease from 23% to 20%. ==== Corporate income tax ==== The reform adopted in June 2019, aims to boost medium-term economic activity and to increase tax compliance.
in years 2019–2024. The goods export structure changed considerably in 2018 as the export of the traditional mining sector decreased while the share of textiles, agriculture and precious metals increased. Geographical location of the country and relatively low electricity costs are comparative advantages supporting to boost the production of the textile and leather products in Armenia.
in years 2019–2024. The global economic crisis has had less impact on imports because the sector is more diversified than exports.
During the first 11 months of 2006, the European Union remained Armenia's largest trading partner, accounting for 34.4 percent of its $2.85 billion commercial exchange during the 11-month period. ====Russia and former Soviet republics==== In first quarter of 2019 share of Russia in foreign trade turnover fell to 11% from 29% in previous year. 2017 CIS countries accounted for 30 percent of Armenia's foreign trade.
This figure is not expected to increase significantly so long as the land border between the Armenia and Turkey remains closed. ===Foreign direct investments=== ====Yearly FDI figures==== Despite robust economic growth foreign direct investment (FDI) in Armenia remain low as of 2018. in January–September 2019, the net flow of direct foreign investment in the real sector of the Armenian economy stood at about $267 million. Jersey was the main source of FDI in 2017.
Instead, the irrigated agriculture project was headed for completion with apparently no prospects for extension beyond 2011. On May 8, 2019, conditioned with the political events in Armenia since April 2018, United States Agency for International Development signed an extension of U.S.-Armenia bilateral agreement in the area of governance and public administration, which would add additional US$8.5 million to the agreement.
The increase in unemployment rate mainly includes people who were left without work during the pandemic. According to prime minister Nikol Pashinyan in January 2019 562,043 payroll jobs were recorded, against of 511,902 in January 2018, an increase of 9.7%.Statistical Committee of Armenia publication based on data retrieved from employers and national income service cites 560,586 payroll positions in January 2019, an increase of 9.9% against previous year.
In 2018, the ratio increased to 18.97% and slowly dropped to 18.81% in 2019.
At the same time it estimates in 2019 that 60% of workers are employed in informal economy. World Bank research also reveals that employment rate fell in years 2000–2015 in middle- and low-skill occupations, while it grew high-skill occupations. See also Statistical Committee of Armenia publication (in English) "Labour market in the Republic of Armenia, 2018". === Female Unemployment in Armenia === Worldwide, women's unemployment rate is higher than men's by approximately 0.8% and equals 6%.
In terms of GDP per capita IMF expects Armenia to surpass neighboring Georgia in 2019 and neighboring Azerbaijan in 2020. With 8.3% Armenia recorded highest degree of GDP growth among Eurasian Economic Union countries in 2018 January–June against the same period of 2017. Earlier, the economy of Armenia grew by 7.5% in 2017 and reached a nominal GDP of $11.5 billion per annum, while per capita figure grew by 10.1% and reached $3880.
In the first half of 2020, the Armenian economy was negatively impacted by the economic restrictions that were implemented in order to combat the Coronavirus pandemic.
According to the World Bank, individual consumption dropped by 9% in the first six months of 2020.
However, without significant government support to offset lost wages, inflation climbed to over 4% during the 2020 calendar year. Armenia's war of defense against Azerbaijan was ended by the November 10th Document, signed by embattled Prime Minister Nikol Pashinyan.
Among other measures, the corporate income tax was reduced by two percentage points to 18.0 per cent and the tax on dividends for non-resident organisations halved to 5.0 per cent. ====Special taxation for small business==== From January 1, 2020, the republic will abandon two alternative tax systems - self-employed and family entrepreneurship.
Armenian exports to China, though still modest in absolute terms, nearly doubled in that period. ====Iran==== Armenia's trade with Iran grew significantly from 2015 and 2020.
In 2020, trade between the countries exceeded $300 million.
The Statistical Committee of Armenia reported that In 2020, the unemployment rate has been volatile reaching to 19.8% during the first quarter of the year and then decreasing to 16% during the fourth quarter.
According to the latest reports on population of Armenia, in December 2020 the population consisted of 2.96million people and the average monthly earning during February 2021 was USD 366.05. The Central Bank of Armenia reported the expected unemployment rate in Armenia to be 20.4% in 2020.
Many factories were converted from private-use to public, and this negatively impacted the economic output from the nation. GDP growth is projected to recoup halfway in 2021 up to 3.4 percent and will increase up to 4.3 percent in 2022.
Specialists won't authorize extra lockdowns and limitations in 2021.
In January 2021, Iran's finance minister Farhad Dejpasand said that trade between the two countries could reach $1 billion annually as Iran looks to become a regional economic force. ====United States==== From January–September 2010, bilateral trade with the United States measured approximately $150 million, on track for about a 30 percent increase over 2009.
According to the latest reports on population of Armenia, in December 2020 the population consisted of 2.96million people and the average monthly earning during February 2021 was USD 366.05. The Central Bank of Armenia reported the expected unemployment rate in Armenia to be 20.4% in 2020.
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