Armenia Economy Profile 2009

Economy - overview

Since the breakup of the Soviet Union in 1991, Armenia has made progress in implementing many economic reforms including privatization, price reforms, and prudent fiscal policies. The conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh contributed to a severe economic decline in the early 1990s. By 1994, however, the Armenian Government launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates. Economic growth has averaged over 10% in recent years. However, with the global economic downturn, Armenia's growth rate dropped to 6.8% in 2008. Armenia has managed to reduce poverty, slash inflation, stabilize its currency, and privatize most small- and medium-sized enterprises. Under the old Soviet central planning system, Armenia developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics, in exchange for raw materials and energy. Armenia has since switched to small-scale agriculture and away from the large agroindustrial complexes of the Soviet era. Nuclear power plants built at Metsamor in the 1970s were closed following the 1988 Spitak Earthquake, though they sustained no damage. One of the two reactors was re-opened in 1995, but the Armenian government is under international pressure to close it due to concerns that the Soviet era design lacks important safeguards. Metsamor provides 40 percent of the country's electricity - hydropower accounts for about one-fourth. Economic ties with Russia remain close, especially in the energy sector. The electricity distribution system was privatized in 2002 and bought by Russia's RAO-UES in 2005. Construction of a pipeline to deliver natural gas from Iran to Armenia was completed in December 2008 and after testing is expected to be operational in Spring 2009, though it is unlikely significant quantities of gas will flow through it until the Yerevan Thermal Power Plant renovation is completed in 2010. Armenia has some mineral deposits (copper, gold, bauxite). Pig iron, unwrought copper, and other nonferrous metals are Armenia's highest valued exports. Armenia's severe trade imbalance has been offset somewhat by international aid, remittances from Armenians working abroad, and foreign direct investment. Armenia joined the WTO in January 2003. The government made some improvements in tax and customs administration in recent years, but anti-corruption measures will be more difficult to implement. Despite strong economic growth, Armenia's unemployment rate remains high. Armenia will need to pursue additional economic reforms in order to improve its economic competitiveness and to build on recent improvements in poverty and unemployment, especially given its economic isolation from two of its nearest neighbors, Turkey and Azerbaijan. The disruption of rail transit into Armenia during the Georgia-Russia conflict in August 2008 highlighted how vulnerable Armenia's supply chains for key goods - such as gasoline - are to instances of regional instability.

GDP (purchasing power parity)

$18.77 billion (2008 est.)
$17.57 billion (2007 est.)
$15.44 billion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate)

$11.93 billion (2008 est.)

GDP - real growth rate

6.8% (2008 est.)
13.8% (2007 est.)
13.2% (2006 est.)

GDP - per capita (PPP)

$6,300 (2008 est.)
$5,900 (2007 est.)
$5,200 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector

agriculture: 16.7%
industry: 33.8%
services: 49.4% (2008 est.)

Population below poverty line

26.5% (2006 est.)

Labor force

1.481 million (2007 est.)

Labor force - by occupation

agriculture: 46.2%
industry: 15.6%
services: 38.2% (2006 est.)

Unemployment rate

7.1% (2007 est.)

Household income or consumption by percentage share

lowest 10%: 1.6%
highest 10%: 41.3% (2004)

Distribution of family income - Gini index

37 (2006)
44.4 (1996)

Investment (gross fixed)

39% of GDP (2008 est.)

Budget

revenues: $2.481 billion
expenditures: $2.626 billion; including capital expenditures of $NA (2008 est.)

Inflation rate (consumer prices)

9% (2008 est.)
4.4% (2007 est.)

Central bank discount rate

7.25% (2 December 2008)
NA% (31 December 2007)
note: this is the Refinancing Rate, the key monetary policy instrument of the Armenian National Bank

Commercial bank prime lending rate

NA% (31 December 2008)
17.52% (31 December 2007)

Stock of money

$1.359 billion (31 December 2008)
$1.507 billion (31 December 2007)

Stock of quasi money

$950.1 million (31 December 2008)
$765.2 million (31 December 2007)

Stock of domestic credit

$1.981 billion (31 December 2008)
$1.256 billion (31 December 2007)

Industries

diamond-processing, metal-cutting machine tools, forging-pressing machines, electric motors, tires, knitted wear, hosiery, shoes, silk fabric, chemicals, trucks, instruments, microelectronics, jewelry manufacturing, software development, food processing, brandy

Industrial production growth rate

2.4% (2008 est.)

Electricity - production

5.544 billion kWh (2007 est.)

Electricity - production by source

fossil fuel: 42.3%
hydro: 27%
nuclear: 30.7%
other: 0% (2001)

Electricity - consumption

4.539 billion kWh (2006 est.)

Electricity - exports

322.6 million kWh; note - exports an unknown quantity to Georgia; includes exports to Nagorno-Karabakh region in Azerbaijan (2007 est.)

Electricity - imports

400.6 million kWh; note - imports an unknown quantity from Iran (2007 est.)

Oil - production

0 bbl/day (2007 est.)

Oil - consumption

41,090 bbl/day (2006 est.)

Oil - imports

44,670 bbl/day (2005)

Oil - exports

0 bbl/day (2005)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2007 est.)

Natural gas - consumption

2.05 billion cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

2.05 billion cu m (2007 est.)

Natural gas - proved reserves

0 cu m (1 January 2006)

Current Account Balance

$-1.355 billion (2008 est.)
$-589.6 million (2007 est.)

Agriculture - products

fruit (especially grapes), vegetables; livestock

Exports

$1.124 billion (2008 est.)
$1.197 billion (2007 est.)

Exports - commodities

pig iron, unwrought copper, nonferrous metals, diamonds, mineral products, foodstuffs, energy

Exports - partners

Russia 20.2%, Germany 17.2%, Netherlands 12.2%, Belgium 8.5%, Georgia 7.7%, Bulgaria 5.7%, US 4.9% (2008)

Imports

$3.763 billion (2008 est.)
$2.797 billion (2007 est.)

Imports - commodities

natural gas, petroleum, tobacco products, foodstuffs, diamonds

Imports - partners

Russia 19.3%, China 8.7%, Ukraine 7%, Turkey 6.1%, Germany 5.8%, US 4.9%, Iran 4.6% (2008)

Reserves of foreign exchange and gold

$1.405 billion (31 December 2008 est.)
$1.659 billion (31 December 2007 est.)

Debt - external

$3.449 billion (31 December 2008)
$2.909 billion (31 December 2007)

Market value of publicly traded shares

$NA (31 December 2008)
$105 million (31 December 2007)
$60.17 million (31 December 2006)

Economic aid - recipient

ODA, $180 million (2007)

Currency (code)

AMD

Currency (code)

dram (AMD)

Exchange rates

drams (AMD) per US dollar - 303.93 (2008 est.), 344.06 (2007), 414.69 (2006), 457.69 (2005), 533.45 (2004)

Fiscal year

calendar year