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.)
Labor force: 1.2 million (2005)
Labor force - by occupation: agriculture: 45% industry: 25% services: 30% (2002 est.)
Unemployment rate:
31.6% (2004 est.)
Population below poverty line:
43% (2003 est.)