According to the results of 2025, Armenia recorded a 9.1% increase in economic activity compared to 2024. The previous year also saw strong growth of around 8%. At first glance, the dynamics appear positive; however, as economist Narek Karapetyan points out, the economic activity indicator does not yet reflect the full picture of the economy’s actual performance.
According to him, a comprehensive assessment of the year’s economic results requires waiting for the gross domestic product (GDP) figure, which is typically lower than the economic activity index. In recent years, this gap has not only persisted but has also widened to some extent.
GDP Lags Behind Economic Activity
Based on the economist’s assessment, in previous years an economic activity growth of around 8% translated into GDP growth of approximately 6%. A similar outcome, Karapetyan suggests, can be expected in 2025 as well. His forecast puts annual GDP growth at around 6%, broadly in line with the government’s target indicators.
Nevertheless, final conclusions will only be possible once the Statistical Committee publishes the official data. Until then, it can only be stated that economic activity remains at a relatively high level.
Growth as a Necessary but Insufficient Condition
Karapetyan emphasizes that a high rate of economic growth alone does not automatically mean sustainable development. Economic development is a multi-layered process in which not only the pace of growth matters, but also its substance.
The quality of development depends on several factors: which social groups are included in the growth, how evenly it is distributed geographically, and what kind of sectoral structure the economy has. If growth is concentrated and not inclusive, it is premature to speak of sustainable development.
Services Dominate, Yerevan Concentrates the Gains
One of the defining characteristics of Armenia’s recent economic growth is its concentrated nature. According to Karapetyan, the main drivers of growth have been the services sector and construction. Most services, including financial and banking activities, are concentrated in Yerevan.
Although construction is gradually expanding into the regions, it still primarily affects the capital and its surrounding areas. The same applies to trade and other service subsectors. As a result, economic growth remains largely confined to Yerevan and nearby territories.
External Factors: Opportunity or Vulnerability?
The economist draws particular attention to the role of external factors. In recent years, growth in the services sector has been largely driven by external demand, especially in financial services and information technology.
The expansion of financial services is closely linked to geopolitical and political conditions, while the IT sector continues to benefit from the relocation effect. According to Karapetyan, it is difficult to say definitively whether these factors are temporary or could persist over the long term, but it is clear that they are externally driven.
Is This Armenia’s Real Economic Potential?
If favorable external conditions weaken, the question arises as to how much economic potential will remain within the country. Karapetyan notes that in economics, potential is often assessed through the long-term growth trend.
For Armenia, this trend over the past two to two and a half decades has been around 5%. In recent years, however, the country has been growing faster than this trend, gradually pushing the long-term growth rate toward approximately 6%.
Time Needed for Clear Conclusions
Despite the positive figures, Karapetyan argues that it is still too early to confidently claim that Armenia has reached a new level of economic potential. The significant influence of external factors means that more time is needed to determine whether the recorded growth is based on genuine improvements in competitiveness and productive capacity, or whether it continues to depend on temporarily favorable circumstances.
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According to the results of 2025, Armenia recorded a 9.1% increase in economic activity compared to 2024. The previous year also saw strong growth of around 8%. At first glance, the dynamics appear positive; however, as economist Narek Karapetyan points out, the economic activity indicator does not yet reflect the full picture of the economy’s actual performance.
According to him, a comprehensive assessment of the year’s economic results requires waiting for the gross domestic product (GDP) figure, which is typically lower than the economic activity index. In recent years, this gap has not only persisted but has also widened to some extent.
GDP Lags Behind Economic Activity
Based on the economist’s assessment, in previous years an economic activity growth of around 8% translated into GDP growth of approximately 6%. A similar outcome, Karapetyan suggests, can be expected in 2025 as well. His forecast puts annual GDP growth at around 6%, broadly in line with the government’s target indicators.
Nevertheless, final conclusions will only be possible once the Statistical Committee publishes the official data. Until then, it can only be stated that economic activity remains at a relatively high level.
Growth as a Necessary but Insufficient Condition
Karapetyan emphasizes that a high rate of economic growth alone does not automatically mean sustainable development. Economic development is a multi-layered process in which not only the pace of growth matters, but also its substance.
The quality of development depends on several factors: which social groups are included in the growth, how evenly it is distributed geographically, and what kind of sectoral structure the economy has. If growth is concentrated and not inclusive, it is premature to speak of sustainable development.
Services Dominate, Yerevan Concentrates the Gains
One of the defining characteristics of Armenia’s recent economic growth is its concentrated nature. According to Karapetyan, the main drivers of growth have been the services sector and construction. Most services, including financial and banking activities, are concentrated in Yerevan.
Although construction is gradually expanding into the regions, it still primarily affects the capital and its surrounding areas. The same applies to trade and other service subsectors. As a result, economic growth remains largely confined to Yerevan and nearby territories.
External Factors: Opportunity or Vulnerability?
The economist draws particular attention to the role of external factors. In recent years, growth in the services sector has been largely driven by external demand, especially in financial services and information technology.
The expansion of financial services is closely linked to geopolitical and political conditions, while the IT sector continues to benefit from the relocation effect. According to Karapetyan, it is difficult to say definitively whether these factors are temporary or could persist over the long term, but it is clear that they are externally driven.
Is This Armenia’s Real Economic Potential?
If favorable external conditions weaken, the question arises as to how much economic potential will remain within the country. Karapetyan notes that in economics, potential is often assessed through the long-term growth trend.
For Armenia, this trend over the past two to two and a half decades has been around 5%. In recent years, however, the country has been growing faster than this trend, gradually pushing the long-term growth rate toward approximately 6%.
Time Needed for Clear Conclusions
Despite the positive figures, Karapetyan argues that it is still too early to confidently claim that Armenia has reached a new level of economic potential. The significant influence of external factors means that more time is needed to determine whether the recorded growth is based on genuine improvements in competitiveness and productive capacity, or whether it continues to depend on temporarily favorable circumstances.