Armenia Economy Profile 2006

Economy - overview

Under the old Soviet central planning system, Armenia had developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics in exchange for raw materials and energy. Since the implosion of the USSR in December 1991, Armenia has switched to small-scale agriculture away from the large agroindustrial complexes of the Soviet era. The agricultural sector has long-term needs for more investment and updated technology. The privatization of industry has been at a slower pace, but has been given renewed emphasis by the current administration. Armenia is a food importer, and its mineral deposits (copper, gold, bauxite) are small. The ongoing conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh and the breakup of the centrally directed economic system of the former Soviet Union contributed to a severe economic decline in the early 1990s. By 1994, however, the Armenian Government had launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates in 1995-2005. Armenia joined the WTO in January 2003. Armenia also has managed to slash inflation, stabilize its currency, and privatize most small- and medium-sized enterprises. Armenia's unemployment rate, however, remains high, despite strong economic growth. The chronic energy shortages Armenia suffered in the early and mid-1990s have been offset by the energy supplied by one of its nuclear power plants at Metsamor. Armenia is now a net energy exporter, although it does not have sufficient generating capacity to replace Metsamor, which is under international pressure to close. The electricity distribution system was privatized in 2002. Armenia's severe trade imbalance has been offset somewhat by international aid, remittances from Armenians working abroad, and foreign direct investment. Economic ties with Russia remain close, especially in the energy sector. The government made some improvements in tax and customs administration in 2005, but anti-corruption measures will be more difficult to implement. Investment in the construction and industrial sectors is expected to continue in 2006 and will help to ensure annual average real GDP growth of about 13.9%.

GDP (purchasing power parity)

$14.45 billion (2005 est.)

GDP (official exchange rate)

$4.868 billion (2005 est.)

GDP - real growth rate

13.9% (2005 est.)

GDP - per capita (PPP)

$4,800 (2005 est.)

GDP - composition by sector

agriculture: 23.9%
industry: 34.3%
services: 41.8% (2005 est.)

Population below poverty line

43% (2003 est.)

Household income or consumption by percentage share

lowest 10%: 1.6%
highest 10%: 41.3% (2004)

Inflation rate (consumer prices)

0.6% (2005 est.)

Investment (gross fixed)

21.4% of GDP (2005 est.)

Labor force

1.2 million (2005)

Labor force - by occupation

agriculture: 45%
industry: 25%
services: 30% (2002 est.)

Unemployment rate

31.6% (2004 est.)

Distribution of family income - Gini index

41.3 (2004)

Budget

revenues: $786.1 million
expenditures: $930.7 million; including capital expenditures of $NA (2005 est.)

Industries

diamond-processing, metal-cutting machine tools, forging-pressing machines, electric motors, tires, knitted wear, hosiery, shoes, silk fabric, chemicals, trucks, instruments, microelectronics, jewelry manufacturing, software development, food processing, brandy

Industrial production growth rate

7.5% (2005 est.)

Electricity - production

6.317 billion kWh (2005)

Electricity - consumption

4.374 billion kWh (2005)

Electricity - exports

650 million kWh; note - exports an unknown quantity to Georgia; includes exports to Nagorno-Karabakh region in Azerbaijan (2003)

Electricity - imports

463 million kWh; note - imports an unknown quantity from Iran (2003)

Oil - production

0 bbl/day (2005)

Oil - consumption

40,000 bbl/day (2003 est.)

Oil - imports

NA bbl/day

Oil - exports

NA bbl/day

Natural gas - production

0 cu m (2005 est.)

Natural gas - consumption

1.685 billion cu m (2005 est.)

Natural gas - exports

0 cu m (2005 est.)

Natural gas - imports

1.685 billion cu m (2005 est.)

Current Account Balance

$-118 million (2005 est.)

Agriculture - products

fruit (especially grapes), vegetables; livestock

Exports

$800 million f.o.b. (2005 est.)

Exports - commodities

diamonds, mineral products, foodstuffs, energy

Exports - partners

Germany 15.6%, Netherlands 13.7%, Belgium 12.8%, Russia 12.2%, Israel 11.5%, US 11.2%, Georgia 4.8% (2005)

Imports

$1.5 billion f.o.b. (2005 est.)

Imports - commodities

natural gas, petroleum, tobacco products, foodstuffs, diamonds

Imports - partners

Russia 13.5%, Belgium 8%, Germany 7.9%, Ukraine 7%, Turkmenistan 6.3%, US 6.2%, Israel 5.8%, Iran 5%, Romania 4.2% (2005)

Reserves of foreign exchange and gold

$754.9 million (2005 est.)

Debt - external

$1.819 billion (20 September 2005)

Economic aid - recipient

ODA, $254 million (2004)

Currency (code)

dram (AMD)

Exchange rates

drams per US dollar - 457.69 (2005), 533.45 (2004), 578.76 (2003), 573.35 (2002), 555.08 (2001)

Fiscal year

calendar year