Economy Overview
Under the old Soviet central planning system, Armenia had developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics in exchange for raw materials and energy. Since the implosion of the USSR in December 1991, Armenia has switched to small-scale agriculture away from the large agroindustrial complexes of the Soviet era. The agricultural sector has long-term needs for more investment and updated technology. The privatization of industry has been at a slower pace, but has been given renewed emphasis by the current administration. Armenia is a food importer, and its mineral deposits (copper, gold, bauxite) are small. The ongoing conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh and the breakup of the centrally directed economic system of the former Soviet Union contributed to a severe economic decline in the early 1990s. By 1994, however, the Armenian Government had launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates in 1995-2006. Armenia has managed to slash inflation, stabilize its currency, and privatize most small- and medium-sized enterprises. Despite strong economic growth, Armenia's unemployment rate remains high. Nuclear power plants built at Metsamor eliminated the chronic energy shortages Armenia suffered in the early and mid-1990s, but those plants are under international pressure to close. Armenia is now a net energy exporter, although it does not have sufficient generating capacity to replace Metsamor. Construction of a natural gas pipeline between Iran and Armenia has been completed and it is scheduled to be commissioned by April 2007. 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. 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 2005, but anti-corruption measures will be more difficult to implement. Investment in the construction and industrial sectors is expected to continue in 2007 and will help to ensure annual average real GDP growth of more than 10%.
Agriculture Products
fruit (especially grapes), vegetables; livestock
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
-1.2% (2006 est.)
Labor Force
1.2 million (November 2006)
Electricity production
5.975 billion kWh (2005)
Electricity Consumption
4.194 billion kWh (2005)
Electricity Exports
1.011 billion kWh; note - exports an unknown quantity to Georgia; includes exports to Nagorno-Karabakh region in Azerbaijan (2005)
Electricity Imports
231 million kWh; note - imports an unknown quantity from Iran (2005)
Unemployment Rate
7.4% (November 2006 est.)
Population Below Poverty Line
34.6% (2004 est.)
Household Income or Consumption by Percentage Share
Lowest 10%: 1.6%
Highest 10%: 41.3% (2004)
Distribution of Family Income Gini Index
41 (2004)
Budget
Revenues: $1.057 billion
Expenditures: $1.153 billion; including capital expenditures of $NA (2006 est.)
Commercial Bank Prime Lending Rate
Market Value of Publicly Traded Shares
$42.8 million (2005)
Reserves of Foreign Exchange and Gold
$1.072 billion (2006 est.)
Debt External
$1.16 billion (30 September 2006)
Stock of Direct Foreign Investment at Home
Stock of Direct Foreign Investment Abroad
Exchange Rates
drams per US dollar - 414.69 (2006), 457.69 (2005), 533.45 (2004), 578.76 (2003), 573.35 (2002)
