Armenia’s dependence on Russia is no longer limited to foreign trade alone. This was stated by former Chairman of Armenia’s State Revenue Committee David Ananyan, who argues that behind the country’s positive macroeconomic indicators lie structural vulnerabilities that could eventually affect economic growth, inflation and social stability.
According to Ananyan, economic activity increased by 11.7% in May 2026 and by 8% during January–May. At the same time, however, exports declined by 3.7%, imports grew by 2.2%, and the trade deficit reached roughly 7% of projected annual GDP. Exports to Russia alone fell by 15% in May.
Inflation is Rising While Public Investment Falls
The former SRC chairman also highlights growing inflationary pressures.
He notes that annual inflation reached 5.1% in June, while food prices increased by 8.6%.
Meanwhile, the government’s reported budget surplus of 0.8% was achieved not through stronger revenues but because capital expenditures were cut by 54.5% and defence spending was significantly reduced.
Dependence on Russia Extends Across the Economy
Ananyan points out that the World Bank has specifically warned about risks associated with political developments involving Russia.
According to him, 40% of foreign tourists and 61% of Armenia’s net money transfers in May came from Russia. These inflows strengthened the Armenian dram, increased banking-sector liquidity and supported domestic demand.
“This means Armenia’s dependence on Russia is no longer simply a matter of foreign trade. It simultaneously affects exports, remittances, tourism, domestic consumption, the exchange rate and energy security,” Ananyan says.
Russian Restrictions Could Affect the Entire Economy
He recalls that during May and June Russia imposed restrictions on imports of Armenian agricultural products, flowers, fish products, mineral water and alcoholic beverages.
According to Ananyan, the World Bank has already warned that if these restrictions remain in place or expand further, their impact will extend beyond trade and affect economic growth, inflation and social conditions.
Europe Cannot Replace the Russian Market Overnight
Commenting on the government’s response, Ananyan notes that officials are relying on state compensation for transport and customs costs while expressing optimism about rapidly redirecting exports to European Union markets.
In his view, European political support is important but economically limited, and expecting the Russian market to be quickly replaced by Europe is unrealistic.
The European market requires far more than tariff-free access.
Exporters must comply with stricter quality and safety standards, obtain internationally recognised certification, ensure product traceability, establish more expensive logistics, maintain reliable supply chains, develop distribution networks, redesign packaging, invest in marketing and build long-term commercial relationships.
Fresh agricultural products, flowers and fish products, he argues, cannot simply be redirected to another market overnight.
“A product exempt from customs duties is not automatically a product that has been sold,” Ananyan stresses.
Economic Safety Buffers Were Never Created
According to the former SRC chairman, the most serious problem is that Armenia’s political relations with Russia have steadily deteriorated while the country’s economy has remained deeply dependent on the Russian market.
He argues that the authorities failed to establish economic safety mechanisms, prepare producers for potential disruptions or develop realistic alternatives.
As a result, greenhouse owners, farmers, fish producers, winemakers, exporters, consumers and taxpayers are now bearing the cost of the current situation.
He also warns that taxpayers will face additional burdens because the government is attempting to offset the consequences of its own policy shortcomings through public spending.
Economic Dependence Has Become Political Leverage
Summing up his assessment, Ananyan argues that Russia has turned Armenia’s economic dependence into an instrument of political pressure.
In his view, the Armenian authorities have neither managed to reduce that dependence nor created credible alternatives, ultimately transferring the costs of their geopolitical choices onto the country’s economy and its citizens.