Construction and services are drivers of GDP growth – Alpha Economics

Armenia’s economy grew by 6.2% in the third quarter. Despite a slight slowdown compared to the 6.4% growth in the second quarter, this figure remains high. What factors are ensuring Armenia’s strong economic growth?

Looking at the GDP structure in the third quarter, the leading sectors were trade (12.7%), agriculture (10.8%), manufacturing (9.9%), real estate operations (8.3%), and construction (7.2%).

The increase in agriculture’s share (10.8%) is particularly encouraging. This deserves special attention given both the importance of the sector and the long‑standing negative trends it has faced. At the same time, agricultural indicators should be studied in parallel to understand the underlying factors.

So, what does the GDP structure reveal? While structural analysis also shows significant shares for trade, construction, and services, it should be noted once again that agricultural growth must be treated with caution. The true drivers of economic growth are revealed by comparing GDP growth with previous periods.

Thus, the 6.2% GDP growth was largely driven by the construction sector, which grew by 24.6%, and services—with information technology and communications up 17.6%, and financial services up 10.5%. Agriculture grew by 3.7% compared to the third quarter of last year, while manufacturing showed a more modest increase of 1.9%.

In fact, Armenia’s rapid GDP growth is being driven by construction and services. The growth in both sectors stems from certain obvious factors of a temporary nature.

This does not mean that new factors supporting growth in these sectors will not emerge in the future, but it does mean that today’s growth is, at least for now, unstable. The modest results in manufacturing, alongside double‑digit growth in construction and services, carry the risk of deindustrialization. This situation calls for measures aimed at diversifying the sources of economic growth.