Highlighting the sector of economy that is currently showing growth

Is Armenia’s economic growth recovering after prolonged external shocks? Statistics, at least, suggest a picture of recovery—is it real or illusory? Economic activity has shown signs of acceleration after a slowdown. In July this year, compared to July last year, growth reached 9.1%. Studying the dynamic curve confirms that after a slowdown at the beginning of the year, economic activity has picked up again. So, is today’s acceleration a sign of recovery, or are we still under the influence of the base effect?

Starting from May-June 2024, the growth rate of economic activity had slowed. It is no coincidence that acceleration has been observed since May this year. That is, the base effect is present. However, it should be noted that certain sectors are contributing to current activity, which in turn ensures today’s economic growth.

Looking at the January-July period, economic activity grew by 7%. Notably, construction and services—non-export sectors—showed significant growth. Meanwhile, the industrial sector is cause for concern, with a decline of 9.8%. The situation in industry is further troubling when examining the GDP structure for the second quarter.

To summarize, the apparent recovery in economic growth is partly due to the base effect. But structural analysis reveals that today’s growth continues to distort the economy’s composition, as it’s driven by gains in non-export sectors.

As for the current growth in agriculture, which has already been presented as “recovery after shocks,” such an assessment can be called either premature—no matter how much we want to see restored agriculture—or simply a well-known tactic: highlighting the sector that is currently showing growth without revealing substantive details—just selective reading of statistics.