External factors are temporary, the substance of Armenia’s economic growth remains unchanged: Alpha Economics

Armenia’s economic activity index for February 2026 has been released. The data shows year-on-year growth of 7.2% in February and a cumulative growth of 7.4% for January–February. In practical terms, economic activity in Armenia continues to run at a high level. Let us try to understand which sectors are driving it.

Looking at the cumulative January–February figures, the strongest growth was recorded in construction at 20.5%. Industry and foreign trade also posted solid gains — 17.2% and 9.3% respectively. A twelve-month view reveals even higher numbers: industrial output in February of this year grew 23.8% compared to February last year, construction rose 21.8%, and foreign trade surged 30.8%.

It is well established that construction has recently been the primary driver of economic activity in Armenia. It is equally well known that foreign trade and industrial output, which previously played that role, came under negative pressure throughout 2025 as external tailwinds faded. Now that both sectors are again showing strong growth, the question arises: are we looking at a genuine sectoral recovery?

In that regard, an analysis of the twelve-month growth dynamics in industry and foreign trade since mid-2025 reveals a rather telling picture. The growth curves of both sectors follow an identical trend.

In both cases, growth turned negative in June 2025, followed by a gradual recovery driven by the base effect, and then a sharp spike in November. That kind of sudden jump is difficult to explain as a natural recovery, and it is no coincidence that it appeared in both sectors simultaneously. The surge continued into December, dipped in January, then bounced back in February. Given the precedent of gold re-export effects on these sectors’ statistics, we are entitled today to suspect that the convergence of the two curves, and the sharp spikes in particular, may once again reflect a pickup in re-export activity. A clearer picture will emerge once more granular data is published. In any case, it is worth recalling that in November 2025, base metals output posted nearly 50% year-on-year growth, which is itself a strong indicator of renewed re-export activity.

Returning to the broader picture of economic activity, it should be noted that growth in any given sector, even when driven by external factors, is not inherently a bad thing, provided its potential downsides are properly accounted for. What is problematic is that Armenia’s economic activity and growth effectively remain trapped in the same cycle: driven either by temporary factors such as construction, or by external factors beyond the country’s control, leaving the sustainability of that growth very much in question. And all of this is unfolding against a backdrop of official messaging about sound economic policy and achievement.