Economist Warns of Risks from Armenia’s Economic Dependence on External Factors

Economist Agasi Tavadyan has expressed concern over the current state of Armenia’s economy, highlighting its excessive reliance on external factors.

According to Tavadyan, the significant economic growth Armenia has experienced in recent years has been largely driven by external circumstances rather than the country’s internal resources, reports news.am.

He noted that the 12.6% GDP growth in 2022 was mainly attributed to the effects of the Russia-Ukraine conflict, which led to an influx of capital and relocations to Armenia, as well as a threefold increase in exports to Russia.

The expert estimated that of the 12.6% growth in 2022, only about 2% was due to internal factors. A similar situation was observed in 2023 when, out of an overall growth rate of 8.7%, only 2% was attributable to internal development.

Agasi Tavadyan also pointed out changes in the flow of Russian gold. Before 2021, 90% of Russian gold was directed to the London Stock Exchange, but in the first four months of 2023, 88% of this gold was exported through Armenia, significantly affecting the country’s economic indicators.

The economist warned that such dependence on external factors could lead to serious economic problems if global conditions change, recalling the 2008 crisis. He also noted the beginning of capital and specialist outflows from Armenia, which could negatively impact the economy in the future.

Earlier, BMG reported that economic activity in Armenia showed a substantial increase of 7.1% in June compared to the same month last year, with a growth rate of 10.4% for the first six months of 2024.

The Armenian state budget for 2024 projects economic growth at 7% and inflation at 4% (±1.5%).