By Alexander Pracht
Armenia’s economic growth slowed to 5.9% in 2024 and is expected to decelerate further over the next two years, as external demand weakens and the current account deficit widens, the Philippines-based Asian Development Bank (ADB) said in its annual economic outlook released this week.
“The Armenian economy has demonstrated resilience in the face of external headwinds, but continued fiscal prudence is essential to maintain stability and support future growth,” the ADB said in the report.
The ADB report noted that growth has steadily slowed from 12.6% in 2022 to 8.3% in 2023 and now to 5.9%, largely due to cooling demand for exports and services. Despite this, investment, especially in infrastructure, remains strong, and Armenia’s industry showed signs of recovery. Inflation fell to 0.3% in 2024, aided by easing global commodity prices and a stable currency, prompting the country’s Central Bank to cut interest rates.
While private consumption continued to grow thanks to low inflation and rising purchasing power, public consumption dropped sharply as the government shifted spending toward capital investment. The fiscal deficit widened to 3.7% of GDP in 2024, and is projected to reach 5.5% in 2025, largely due to higher social spending and investment in infrastructure.
Growth is predicted to slow further to 5.0% in 2025 and 4.7% in 2026, driven mainly by domestic demand. Inflation is expected to rise slightly but remain within the Central Bank’s new 3% ±1% target range.
The ADB highlighted the need for stronger fiscal management, including better oversight of public investment and state-owned enterprises, to preserve macroeconomic stability amid rising spending pressures.
As the government pursues fiscal reforms and infrastructure investments, the ADB stressed that maintaining a balance between fiscal discipline and rising spending needs will be crucial for Armenia’s economic resilience. Further strengthening of public investment management, especially considering climate change and social impacts, remains a priority for future policy.
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