Under the Armenian government’s new five-year program, average annual economic growth of 6% is expected over the next five years. Although the previous 2021–2026 program targeted average growth of 7%, Finance Minister Vahe Hovhannisyan considers the 6% target sufficiently ambitious given the high economic growth base of recent years.
According to the minister, Armenia’s economy grew by an average of 7.9% during the previous five-year program, exceeding the 7% target.
Hovhannisyan said economic policy for the coming years is being built on these results.
“Our base is quite high. Achieving 6% growth on top of the level we already have means that, in absolute terms, we must grow faster than in previous years. In other words, our nominal growth will be quite rapid,” the finance minister said.
Hovhannisyan also bases the government’s new forecast on changes in Armenia’s economic potential.
According to him, while the economy’s potential growth was previously estimated at around 4–4.5%, it is now assessed at approximately 5–5.5%.
The minister says this increase in economic potential is based on investments made in recent years.
These include investments in economic infrastructure, modernization of the private sector, and development of human capital.
“We see how the productivity of our economy is improving. We are making major investments in human capital development. And this is not all: comprehensive investments have been made in different areas, the results of which we will see in the future,” Hovhannisyan said.
He cited agriculture as one example.
The government expects agricultural output to increase by around 50% in the coming years.
The minister links this particularly to investments made in intensive agriculture.
According to him, government subsidies for part of these investments have led to the creation of thousands of hectares of intensive orchards in Armenia.
Hovhannisyan said their area has even exceeded the targets set out in the government’s strategy, and those orchards are expected to begin producing at full capacity in the coming years.
Former Finance Minister Vardan Aramyan, however, shifts the focus from the size of the government’s projected 6% growth to its structure.
Aramyan does not consider the new target moderate, while recalling that he had viewed the 7% growth target in the previous program as ambitious from the outset.
According to him, the high economic growth of recent years was significantly influenced by external factors.
In particular, after 2022 Armenia benefited from a number of positive economic effects stemming from the Russia-Ukraine conflict, which stimulated domestic demand, financial flows, and activity in individual sectors of the economy.
Aramyan’s main concern, however, is the structure of Armenia’s economic growth.
According to him, the non-tradable sector continues to be the main driver of growth.
“I am always concerned about the vulnerability of the structure of economic growth,” the former minister said, drawing particular attention to the high growth rates in trade and construction.
According to him, the economic activity indicator reached 7.7% in January–July, but non-tradable sectors continued to dominate its structure.
Construction growth, in particular, reached around 25%.
Aramyan disagrees with the view that residential construction in Armenia can be fully regarded as productive investment.
According to him, housing is primarily a durable consumption good rather than investment capital that increases the economy’s export and productivity potential.
In the former minister’s assessment, if economic growth is generated mainly by the non-tradable sector — particularly real estate, construction, and trade — then it is based on a demand-driven growth model.
For long-term and more sustainable economic growth, Aramyan argues that tradable sectors should dominate the economy, including industry and services that can be exported.
He highlights the high-tech sector as one of the areas capable of providing greater economic “depth” and generating income from external markets.
In this context, Aramyan also considers the level of investment problematic.
According to him, the government’s previous program set a target of increasing investment to 25% of GDP, but the actual figure remained below 24%.
More concerning, in his assessment, is the level of foreign direct investment.
In 2025, according to figures cited by Aramyan, net foreign direct investment in the real economy amounted to around AMD 93 billion, or less than 1% of GDP.
The previous program, meanwhile, had targeted a level equal to 6% of GDP.
Aramyan notes that foreign direct investment levels can be substantially higher in comparable countries.
According to him, in Georgia the figure reached as high as 10–11% in some years.
The former finance minister says Armenia’s investment problem is not new.
In 2024, according to him, the country even recorded a negative net investment flow, with an outflow of around AMD 45 billion.
Thus, the government and the former finance minister differ not so much on whether 6% economic growth is possible, but on what should generate that growth.
The government emphasizes infrastructure, private-sector, and human-capital investments made in recent years and expects their effects to improve economic productivity in the coming years.
Aramyan, meanwhile, warns that high economic activity does not by itself mean sustainable and long-term economic growth.
In his assessment, without significant growth in tradable sectors, productive investment, and foreign direct investment, the economy may maintain high growth rates in the short term while remaining vulnerable to changes in external and domestic demand.
Therefore, the central question surrounding the government’s 6% growth target for the next five years is not only whether that growth can be achieved, but what kind of economy will emerge as a result of that 6%.