Despite Armenia’s GDP growing by 9.2% in the first quarter of 2024, economists consider the structure of this growth problematic and insist on revising the official data.
“A 9.2% ‘economic growth’ was recorded, with manufacturing alone ‘growing’ by 31.1%. There is no doubt that this figure needs to be reviewed,” said Haykaz Fanyan, head of the ACSES analytical center, in an interview with BMG.
According to Fanyan, the main problem with the current economic growth is that it is overly dependent on the manufacturing sector, specifically the jewelry industry. Although production volumes in this industry are growing rapidly, the added value generated does not match this growth rate.
“I suspect the problem lies in how the added value in this sector is calculated. The previous calculation scheme cannot be used because the sector has changed significantly in recent months due to high volumes of re-exports. With re-exports, a lower added value is generated. There might be some processing, but not to such an extent. The jewelry sector could not have grown by 31%,” the expert explained.
BMG previously reported that the sharp increase in the jewelry sector in Armenia is largely due to the re-export of gold from Russia to the United Arab Emirates and Hong Kong. Economists note that this growth is significantly driven by external factors, making it unsustainable and potentially unstable if external conditions change.
These considerations regarding the re-export of Russian gold are confirmed by official data, cited by another economist Suren Parsyan.
“Armenia exported $4 billion worth of Russian gold in a few months and became one of the countries providing revenue for the Russian budget. This economic growth is, in a way, a result of inflating a bubble,” Suren Parsyan said in an interview with BMG.
In his view, Armenia has gained this re-export opportunity by pursuing a “pro-Western foreign policy,” which, from the economist’s perspective, allows Yerevan to avoid secondary Western sanctions.
Earlier, BMG reported that Armenia's GDP increased by 9.2% in the first quarter compared to the same period last year, exceeding $5 billion. In the first quarter of 2024, GDP per capita in Armenia was 653,721 drams ($1,685) compared to 608,356 drams ($1,560) for the same period last year.
The economic growth of Armenia in the state budget for 2024 is projected at 7%, with inflation set at 4% (±1.5%).
