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.
In Q2-2021, a strong recovery started and GDP grew by massive 13.1%. For the whole year, GDP will grow by ca. 5.5% in real terms. This unexpected strong recovery was fuelled by two factors: strong remittances, which supported consumption, and a significant increase in political stability after the clear results of the snap elections in June 2021. On parallel, the exchange rate appreciated and stands now at a similar level as before the start of COVID-19.
While these developments are highly welcomed, it also shows the strong link between the economic and political situation in a country.
