Economic Monitor

In 2025 growth remains high at 7.4% yoy, mainly driven by consumption. In 2026 growth is expected to normalise towards the long-term trend growth rate of around 5%.

GDP to grow by 3.4% in 2025, driven by expansionary fiscal policy and private consumption on the back of higher wages and pensions.

Economy grew by 3.8% in 1H2025, despite political instability.

Fiscal deficit of 2.6% of GDP planned for 2025: increased public spending in 1H2025, in line with plans.

Robust economic growth of 5% is expected in 2025/2026. The finalisation of the peace agreement with Azerbaijan and the opening of the borders offer considerable upside potential.

Negative effect of energy shock on GDP, inflation and external sector. As such, no economic recovery from the severe recession in 2022.

Growth is expected to slow to 2.0% yoy in 2025, followed by a moderate increase to 2.8% in 2026. As the war continues, the focus remains on repair measures rather than broad-based reconstruction (“Build Back Better”).

Expansionary fiscal policy contributes to economic growth, but has an impact on the budget and inflation.

Following the strong impact of positive external shocks on economic growth last year, the Armenian economy is returning to its potential growth rate in the current and upcoming years.

After strong economic growth in 2024, a slowdown is expected this year. Inflation remains high and the numbers are likely to exceed the official figures reported.

The Albanian economy grew by 4% last year, with private consumption and investment acting as the strongest growth drivers; a fairly tight monetary policy is supporting disinflation.

The Kosovar economy grew by 4.4% in 2024, which is a strong performance even by regional standards; inflation rate is falling, while the budget deficit remains low.