After strong growth in 2025, Armenia’s economy is expected to enter a slower but more stable phase of development. This view is held by former Deputy Prime Minister of Armenia, economist Vache Gabrielyan.
According to his forecast, from 2026 the economy will move into a more stable yet slower growth phase. Financial services and the IT sector will remain the main stable drivers, while construction and re-export-based sectors will lose momentum.
Construction — toward stabilisation and decline
He notes that construction has been one of the main growth engines in recent years, but this growth could not be long-term. Gabrielyan explains that it was driven by government subsidy programmes, particularly the income tax refund mechanism, which led to “turbo development” around Yerevan.
He compares the situation to car re-exports in 2019, when many rushed to take advantage of the opportunity, followed by a sharp slowdown.
According to him, the construction boom occurred in 2024–2025, growth will continue somewhat in 2026, but will slow significantly in 2027 as earlier projects are completed. Currently, project completions dominate rather than new construction launches, which raises doubts about the sector’s sustainability.
The boom will not end immediately with the removal of subsidies: unfinished projects must be completed, commissioning documents signed, and finishing works carried out. This inertia will last at least 2–3 years, but starting from 2026 no major new construction wave is expected, making sustained growth uncertain.
Financial sector — the most stable driver
Unlike construction, the financial and banking sector has more stable prospects. Its growth has been driven not by subsidies but by the transformation of global financial flows following the Russia-Ukraine war. Armenian banks service legal flows that allow residents of Russia and other countries to conduct trade, manage funds, and perform financial operations under better conditions.
Even if the war ends, sanctions and restrictions will not disappear immediately, meaning demand for such services will remain. In the near term, the volume of financial services provided to foreign clients is expected to remain at least at current levels. Moreover, new clients are emerging, while banks continue investing in technology and service quality.
“The only relatively stable sector in the near future will be the financial sector,” he said. Thus, financial services will remain one of the key pillars of the economy.
Outlook for other sectors
According to Gabrielyan, trade and re-exports will gradually decline but remain at a stable level without significant growth. Air transport and passenger traffic could expand if airport capacity improves and Armenia exits the European aviation blacklist, although prospects remain limited due to the lack of a national global airline.
Industry, in his view, will not become a dominant sector in the long term, as service exports are more realistic and effective for countries like Armenia. The IT sector has seen increased potential since 2022 due to the inflow of specialists from Russia, but growth was lower than expected: some highly qualified professionals relocated to Cyprus, Serbia and other countries, while mid-level specialists remained, ensuring slow but steady growth.
“We have slowing growth, but we still have growth,” he notes.
In agriculture, investments have been made in modern orchards and advanced technologies, but the scale effect needed for export diversification beyond Russia — for example to the Middle East — has not yet formed. Gabrielyan does not rule out that within one or two years the sector may reach stability and the cycle of declines typical of previous years will end.