Armenia Economy Profile 2008

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 13% in recent years. 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 is halfway completed and is scheduled to be commissioned by January 2009. 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.

GDP (purchasing power parity)

$16.83 billion (2007 est.)

GDP (official exchange rate)

$9.27 billion (2007 est.)

GDP - real growth rate

13.7% (2007 est.)

GDP - per capita (PPP)

$5,700 (2007 est.)

GDP - composition by sector

agriculture: 17.2%
industry: 36.4%
services: 46.4% (2007 est.)

Population below poverty line

26.5% (2006 est.)

Household income or consumption by percentage share

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

Inflation rate (consumer prices)

6.6% (2007 est.)

Investment (gross fixed)

30.3% of GDP (2007 est.)

Labor force

1.2 million (2007 est.)

Labor force - by occupation

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

Unemployment rate

7.1% (2007 est.)

Distribution of family income - Gini index

37 (2006)

Budget

revenues: $1.648 billion
expenditures: $1.645 billion; including capital expenditures of $NA (2007 est.)

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

2.6% (2007 est.)

Electricity - production

5.941 billion kWh (2006)

Electricity - consumption

5.454 billion kWh (2006)

Electricity - exports

754.5 million kWh; note - exports an unknown quantity to Georgia; includes exports to Nagorno-Karabakh region in Azerbaijan (2006)

Electricity - imports

354.9 million kWh; note - imports an unknown quantity from Iran (2006)

Oil - production

0 bbl/day (2005)

Oil - consumption

40,000 bbl/day (2005 est.)

Oil - imports

41,240 bbl/day (2004)

Oil - exports

0 bbl/day (2004)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2007 est.)

Natural gas - consumption

2.2 billion cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

2.2 billion cu m (2007)

Natural gas - proved reserves

0 cu m (1 January 2006)

Current Account Balance

-$440 million (2007 est.)

Agriculture - products

fruit (especially grapes), vegetables; livestock

Exports

$1.157 billion f.o.b. (2007 est.)

Exports - commodities

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

Exports - partners

Germany 18.3%, Netherlands 14.1%, Belgium 13.3%, Russia 13.1%, Israel 7%, US 6.1%, Georgia 5.1%, Iran 4.9% (2006)

Imports

$3.281 billion f.o.b. (2007 est.)

Imports - commodities

natural gas, petroleum, tobacco products, foodstuffs, diamonds

Imports - partners

Russia 21.8%, Ukraine 7.8%, Belgium 7.6%, Turkmenistan 7.1%, Italy 6.1%, Germany 5.7%, Iran 5.7%, Israel 4.8%, US 4.5%, Georgia 4.1% (2006)

Reserves of foreign exchange and gold

$1.646 billion (December 2007 est.)

Debt - external

$1.372 billion (31 December 2007 est.)

Market value of publicly traded shares

$42.8 million (2005)

Economic aid - recipient

ODA, $180 million (2007)

Currency (code)

dram (AMD)

Exchange rates

drams per US dollar - 344.06 (2007), 414.69 (2006), 457.69 (2005), 533.45 (2004), 578.76 (2003)

Fiscal year

calendar year