Armenia's strong growth rates of pre-crisis period were replaced by a 4.3% rate after the crisis. Earlier strong performance of growth estimated to moderate to only 3.2% in 2013. Reduction in private consumption and public investments underpinned the decline. Read More »
Armenia’s economy has undergone a profound transformation since independence. Sustained growth, ambitious reforms, and external inflows of capital and remittances have created a market-oriented environment. However, the global financial crisis had a major impact on Armenia.
Double digit growth rates of pre-crisis period were replaced by a 4.3 percent rate after the crisis. Earlier strong performance of growth estimated to moderate to only 3.2 percent in 2013. Reduction in private consumption and public investments underpinned the decline.
The central challenge for the government is to mitigate the economic and social impacts of the global crisis for the midterm, while continuing policy and institutional reforms essential for recovery and long-term development. Increasing the economy’s resilience to external shocks and creating new opportunities for development are important priorities.
With a per-capita GDP of US$ 3,870 (GNI, 2013), Armenia is a lower middle-income country. Remittances from migrant workers play an important role in Armenia’s economy. The growth of household deposits is strongly supported by an 11 percent growth in remittances as of June 2013. With exports and remittances dependent on international prices for commodities, the Armenian economy is vulnerable to adverse shock to terms of trade from global developments.
The effect of the financial crisis on rural and urban poverty has been dramatic—the poverty rate increased from 27.6% in 2008 to 35% in 2011. The poor have been supported through targeted social expenditures and pension increases, and as growth picks up the number of people living in poverty is expected to fall.
Last Updated: Feb 17, 2014
The World Bank Group’s Country Partnership Strategy (CPS) for 2009 -2012, extended until 2013, is anchored on two strategic objectives: addressing vulnerability (for the short-term) and strengthening competitiveness for post-crisis growth (for the long-term).
In addition to investment projects and analytical work, the World Bank has proposed a series of three annual Development Policy Operations (DPO) to protect the poor and support greater human capital development, and to improve competitiveness by encouraging better governance and fostering a more favorable investment climate.
Armenia was one of the first two countries that benefitted from a special fast track facility set up by the World Bank Group to help the world’s poorest countries cope with the impact of the global financial crisis.
The Board of Directors approved a package of three operations—the Lifeline Roads Improvement Project, the Additional Financing for the Social Investment Fund, and the Additional Financing for the Rural Enterprise and Small Scale Commercial Agriculture Development Project—that helped Armenia mitigate the impact of the crisis on the country’s economy and the well being of its population.
Throughout 2009-2011 fiscal years, the Bank made available around US$ 440.6 million for various projects and provided general support during the Eurozone crisis. Since joining the World Bank in 1992 and IDA in 1993, the total IDA and IBRD commitments to Armenia amount to US$ 1,624 million for 55 projects.
As of June 2012, the Bank is financing 14 projects in Armenia totaling US$ 383.1 million, which address needs in various sectors, including roads, energy, agriculture, education, health, irrigation, rural development, and public administration.
The World Bank’s impact in Armenia has been felt across many sectors including roads, energy, agriculture, education, health, irrigation, rural development, public administration, and judiciary.
Recent development results in Armenia include:
Improving Rural “Lifeline” Roads: The most isolated communities in Armenia are benefitting from improved roads that can bring in tourists and chances for economic revival. The Lifeline Roads Improvement Project has reconnected Armenia’s isolated rural communities to their urban centers. Since 2009, 290 km of roads linking villages to main highways have been rehabilitated while creating over 27,000 person-months of employment in affected rural areas. By the end of 2013, 140 additional km will be rehabilitated.
Reforming the Energy Sector: Second generation energy reforms in Armenia focused on the use of safe, clean and affordable heating and renewable energy generation. IDA-supported reforms drove up the share of urban households using safe and clean gas-based heating from 13% in 2005 to 71% in 2010. Gas-related explosions, poisonings and fires reduced four-fold. Privately owned renewable energy generation grew from 137 GWh to 417 GWh.
Improving Access to Water: The quality, reliability, and efficiency of water supply services have improved dramatically for Yerevan, the capital and largest city of Armenia. The International Development Association (IDA) has supported the government of Armenia in providing a safe and stable water supply and reducing environmental pollution through two water and wastewater management projects. Over 332,000 households in Yerevan have benefitted from improvements in the duration of water supply and water quality.
In addition, the average number of daily hours of drinking water service outside the capital city increased from an average of six hours per day in 2004 to 17 hours per day in 2011.
Modernizing Healthcare: Through two phases of the Heath System Modernization project about 2.5 million Armenians have better access to modernized facilities and quality health care provided by retrained physicians and nurses. In the regions, a small number of specially trained physicians in centralized, renovated regional medical centers now provide a wide range of health care services with state-of-the-art equipment.
Improving Agriculture through Irrigation: Irrigation is slowly changing the landscape of Armenian agriculture and improving the lives of farmers. Instead of growing wheat or barley, thousands of the country's small farmers have been planting crops that need more water but ultimately yield more cash. The transformation comes thanks to investments supported by the World Bank over many years in the country's irrigation and water rights systems. Additionally, 71 irrigation dams were brought upto international safety standards, reducing the risk of dam failure and flooding for about 570,000 people living downstream from the dams.