Armenia’s economy has undergone a profound transformation since independence. Sustained growth, ambitious reforms, as well as inflows of capital and remittances have created a market-oriented environment. However, the global financial crisis impacted significantly the market of the country.
Double digit growth rates of pre-crisis period were replaced by a 4.0 percent rate after the crisis. Following a moderate 3.2 percent growth in 2013, the expectations are that in 2014 it will further decline to 2.6, driven by the regression in construction and slowdown in Russia.
The key 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 an estimated per-capita GDP of US$ 3,830 (GNI, 2014), Armenia is a lower middle-income country. Remittances from migrant workers, that play an important role in Armenia’s economy, decelerated in the second half of 2014 as macroeconomic performance in Russia deteriorated. With exports and remittances dependent on international prices for commodities, the Armenian economy becomes more exposed to the balance of payments shocks, as these prices are on declining trend now.
The effect of the financial crisis on rural and urban poverty has been dramatic—the poverty rate increased from 27.6% in 2008 to 32% in 2013. The role of targeted social expenditures and pension increase is to result in substantial poverty reduction gains amidst a languished economic growth of the post-crisis period.
Last Updated: Dec 14, 2014