Deep Economic Declines: What Is Most Concerning

Operational data on the growth of the economic activity index for the first quarter of 2025 reflects rather alarming, yet predictable, developments. These include significant declines across several areas.

Notably, the decline was observed in foreign trade turnover (a 31.8% drop over 12 months and 54.2% in the quarter) and industry (a 16.9% decline over 12 months and 18.5% in the quarter). It is worth mentioning that these sectors have been the key drivers of the Armenian economy, at least during 2024. To compare, the industrial decline of -18.5% in January–March 2025 contrasts sharply with a 30.4% growth in the same period of 2024. Similarly, exports fell by -61.8% this year, compared to a remarkable increase of 2.7 times during the previous year.

While falling indicators are problematic on their own, they are merely statistics. We would have had the same situation as we are losing external influences. However, the deeper concern lies elsewhere. For instance, the decline in industry is not solely linked to the re-export factor—it also stems from reduced production and exports in key sectors, such as beverages, particularly cognac, one of Armenia’s main export goods.

What should be the expected course of action in such circumstances? There should be implementation of appropriate and stimulating policies targeting export sectors. Can we expect the current authorities to implement such a policy, especially considering they failed to do so even during the positive developments in the economy? There seems to be little room for optimistic expectations.