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Armenia:
Armenia's economy is based on agriculture, mineral exploitation, hydroelectricity, telecommunications, jewellery, and tourism. Agriculture represents 11.2% of GDP and employs 24% of the total workforce (World Bank, latest data available). Armenia suffers from low levels of cultivation of arable land, limited resources and low growth potential due to political instability. Small and fragmented plots are used for subsistence agriculture. Main crops include potatoes, tomatoes, grapes, wheat and melons, cotton and tobacco. Armenia's livestock sector is also pivotal, representing almost 40% of the country’s gross agricultural product. The latest figures from FAO show that the 2021 total cereal output was forecast at about 208,000 tonnes, almost 30% below the average level; with the production of wheat (at about 120,000 tonnes) well below the five year average. This was due to a gradual reduction in planted areas that almost halved since 2015.
The industry contributes 27% of GDP and employs 17.5% of the total workforce. Armenia has copper, molybdenum, bauxite, zinc, lead, iron, gold, and mercury deposits, the basis of the country’s chemical industry sector and its main exports. The mining sector is one of the largest contributors to GDP and exports (especially metal ores). Hydroelectricity is very well developed in the country, to the point that Armenia is now exporting it (although most of it is foreign-owned). The manufacturing sector alone accounts for 12.4% of GDP (World Bank). According to official government data, the industrial output in January-November 2021 grew by 2.7% year-on-year to a little more than AMD 2.1 trillion.
Services represent 53.2% of GDP and employ 51.2% of the active population. The sector includes jewelry (particularly because of the size of its diamonds) and tourism. Banking, in particular, has grown: it is considered a solid and stable sector and is composed of 17 commercial banks (European Banking Federation). As the Covid-19 pandemic has severely affected the tourism sector, the EU announced a call for proposals to support Armenia's tourism industry. Nevertheless, the number of foreign tourists visiting Armenia in the first half of 2021 dropped to 239,263 from 307,590 who had visited the country in the same period one year earlier, according to the latest figures by the National Statistical Committee (NSC).
Source: Comtrade, Latest Available Data
Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
Employment By Sector (in % of Total Employment) | 24.0 | 24.8 | 51.2 |
Value Added (in % of GDP) | 11.7 | 26.4 | 53.3 |
Value Added (Annual % Change) | -4.0 | -2.2 | -9.1 |
Source: World Bank - Latest available data.
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Armenia's industrial sector contributes 45% to the GDP. Agriculture, IT sector, Electronics and Precision Engineering, Mining, Chemical and Pharmaceuticals, Jewelry and Diamonds processing, Textile and Clothing constitute the main industries.
Armenia's IT sector receives significant attention as a possible growth industry. It currently employs between 3,500 and 4,000 people. Besides, productivity is high and wages low in comparison with Europe and the USA, and the level of education is quite high, thus making this sector quite competitive.
The clothing sector shows also great prospects. Cheap labor, existing factories and a positive trade regime (including free access to CIS markets) create favorable conditions for investment in light industries like textiles, carpets, footwear and apparel.
Construction has been the leading sector of the economy for the past six years. The sector accounts for 26% of the country's GDP. Growth in construction is mainly driven by an increased demand for higher quality housing funded primarily by remittances. Diaspora Armenians seeking a base in Armenia have also significantly contributed to the sector's demand.
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Latest Update: July 2022