Newsletter Armenia Issue 2 | November – December 2021

Strong economic recovery on the back of political stability

In the period Q2-2020 to Q1-2021, the economic situation in Armenia was rather bleak. The economy was hit by COVID-19 and the war over Nagorno-Karabakh. On top, the country experienced political uncertainty. Against this background, GDP declined heavily: by 7.4% in 2020 and by 3.3% in Q1-2021. Furthermore, the national currency depreciated by up to 11% against the US dollar.


Economic Monitor Armenia – Issue 06 | November 2021


• Confidence has increased after clear outcome of parliamentary elections
• GDP to grow by 5.5% in 2021; significant recovery compared to 2020
• Drivers: higher remittances and increased political stability support consumption
• Budget deficit at 3.7% and public debt to remain stable at 63% of GDP in 2021; fiscal
consolidation in 2022 likely
• Low current account deficit in 2020 and 2021
• Good performance of exports of goods on the back of high metal prices in 2021, but
exports of services (esp. tourism inflows) remain weak
• Slow recovery of FDI after decline by more than half in 2020
• Issuance of USD 750 m Eurobond secures external sustainability for the time being
• Depreciation of Dram amid high uncertainty in Nov2020-Apr2021, followed by recent
appreciation; Dram back to pre-crisis level
• Hikes in CBA’s policy rate due to increased inflation and inflation expectations

Download Economic Monitor 06/2021

Newsletter Armenia Issue 1 | September – October 2021

Reforms to improve the investment climate in Armenia

Increasing private investment is vital to help Armenia return to a path of solid growth as experienced before 2020. This requires continuous work on the business and investment environment. To support the government’s ongoing efforts, the German Economic Team and three business associations active in Armenia presented a study of 13 proposals addressing issues experienced by Germany- and EU-related companies and investors in Armenia.


Economic Monitor Armenia – Issue 05 | June 2021


  • Prime Minister Pashinyan has stepped down, elections are scheduled for 20 June 2021
  • GDP to grow by 2.9% in 2021; mainly on the back of public expenditure
  • Relatively subdued growth outlook after twin shocks in 2020
  • Consumption to pick up again in 2021, investment likely to remain subdued
  • Budget deficit estimate: 5.4% of GDP in 2021; public debt to rise to 69% of GDP in 2021; fiscal consolidation in 2022 likely
  • Current account deficit estimated at 6.7% of GDP in 2021
  • Mixed performance of exports expected: rebound due to high metal prices, but slow return of tourists in 2021; imports to pick up again
  • Slow recovery of FDI due to political uncertainty after decline by more than half in 2020
  • Issuance of EUR 750 m Eurobond secures external sustainability for the time being
  • Depreciation of Dram amid high uncertainty throughout Q4-2020 and Q1-2021
  • Hikes in policy rate due to increased inflation, after multiple reductions in 2020

Economic Monitor Armenia – Issue 04 | Update March 2021


  • GDP to decline by 7.6% in 2020; twin shocks: COVID-19 and military confrontation
  • Slow recovery expected; GDP to stagnate in 2021, uncertainty stems from political instability
  • Investment likely to remain subdued in 2021, consumption may recover
  • Budget deficit estimate: 5.4% of GDP in 2020; public debt to rise to 69% of GDP in 2021
  • Current account deficit estimated at 6.0% in 2020; lower than 2019
  • Strong decline in exports (esp. tourism) counteracted by even larger import contraction
  • At the same time: FDI declined by almost half in 2020, expected to recover only slowly
  • Augmentation of IMF stand-by arrangement and disbursement of approx. USD 232 m key for financing the budget deficit in 2020
  • Rather stable exchange rate in 1H-2020, depreciation of Dram amid high uncertainty in Q3
  • After multiple reductions in 2020, hikes in policy rate in Dec-20/Jan-21 due to increased inflation

Policy Study 03/2020

Improving the business Climate – Boosting Private Investment: Proposals from German and European business in Armenia


Economic Monitor Armenia – Issue 03 | August 2020 (update)

Overview: economic situation in 2020

  • GDP to drop by 1.5%; pre-COVID forecast: 5.5%
  • Strong reduction of private consumption and investment counteracted by gov spending
  • Budget deficit will amount to 5.0% of GDP, compared with pre-COVID plan of 2.3%
  • Current account deficit at 8.6% of GDP, only slightly higher than pre-COVID 8.4%
  • Strong decline in exports and remittances counterbalanced by large import contraction
  • But: lower FDI and reversal of private capital inflows create problems for financing the current account deficit
  • Augmentation of IMF stand by arrangement and immediate disbursement of USD 280 m key for financing both the budget and the current account deficit
  • Rather stable exchange rate, after temporary depreciation by 5% in March 2020

Economic Monitor Armenia – Issue 02 | January 2020


  • Economic growth at ca. 7.0% in 2019, significantly higher than expected
  • Main driver was private consumption, on the back of robust retail lending
  • Investment activity declined in 2019, with negative implications on mid term growth
  • GDP is forecast to grow by 4.9% in 2020

Economic Monitor Armenia – Issue 01 | October 2019


  • Economic growth in Q1 19 (7.2%) and Q2 19 (6.5%) significantly higher than expected
  • Budget surplus in 7M2019 due to high revenues & under execution of capital expenditures
  • Inflation forecast for 2019 at 2.1%; low inflation key ingredient of macroeconomic stability

Policy Study 01/2019

Identifying promising target groups and key arguments for investment attraction measures of the Republic of Armenia