The only beneficiary of Armenia’s economic growth is the country’s authorities

Who is the beneficiary of Armenia’s economic growth? A question that, under normal circumstances, might seem unusual. However, given the gap between Armenia’s statistical indicators and reality—especially in recent years— it is a fair question to ask.

In fact, Armenia’s economy statistically continues to show high growth, at least in the context of developments in the real sector of the economy. At the expense of what is this happening?

Analyzing the cumulative economic activity index for January-April (4.4%) reveals that growth was primarily driven by the service, construction, and trade sectors. Meanwhile, a key sector—industry—experienced a decline (-16.1%).

Foreign trade turnover also saw a sharp decline, affecting both exports and imports. In fact, there are no external factors, and it is clear that we have serious problems here as well.

It turns out that the structure of Armenia’s economic growth continues to deteriorate. This trend is also evident in quarterly GDP figures. By the way, unlike the economic activity index, which serves as an indicative measure, GDP provides a more concrete assessment of the economy.

In the first three months, GDP growth of 5.2% may not seem low, but it was largely driven by the same sectors that fail to create exportable value. Meanwhile, the critical manufacturing sector recorded a decline of -21.1%. The 8.1% growth of agriculture is pleasing, but it takes time to see whether this is due to temporary effects—such as favorable weather—or long-term developments. Of course, the second scenario would be preferable.

Returning to the question of who truly benefits from this growth, we note that the beneficiary of economic growth will be society only if it is positively affected, if not in the current period, then at least when the prospects for sustainable development have been created. At the moment, social tensions and the prospect of a future with, for example, rising public debt do not create such expectations.

Are the international community and partners the beneficiaries? High statistics can be the basis for assessments and rankings for partners, and they are. But all partner organizations have always noted and continue to note the main factors that have led to growth in recent years and still do today. By doing so, they send the message that they see that there is growth, but they also understand what is driving it.

Are investors the beneficiaries? Unless we are talking about an investment project of geopolitical interest, security and a stable economic and political environment are important prerequisites for any large investment project. We do not have a positive picture of either of these conditions.

Could the Armenian authorities be the beneficiaries of this statistically high economic growth? Perhaps they are the only beneficiaries that intend to continue their propaganda of “unprecedented”, high growth rates.