A new analysis of Armenia’s socio-economic development from January to November 2024, conducted by the Luys Foundation, highlights a significant slowdown in the country’s economic growth, accompanied by a sharp rise in consumer lending volumes.
According to the study, Armenia’s economic activity has decelerated markedly, a development that was largely anticipated. The primary driver of this slowdown is the decline in gold re-export volumes. Last year, these volumes were recorded as domestic production, contributing to accelerated economic growth. This year, not only have re-export volumes significantly decreased, but a smaller portion is being registered as Armenian output.
Experts from the foundation note that the industrial sector, exports, and imports are also in decline. Beyond the reduced gold re-exports, other sectors of the economy are exhibiting either minimal growth or outright contraction, raising serious concerns about the potential weakening of the country’s economic capacity.
Of particular concern is the possibility that macroeconomic indicators may deviate significantly from government forecasts. Given the current low levels of economic activity, growth by year-end could fall well below the 5.8% target underpinning the 2025 state budget. Additionally, inflation may also underperform projections, jeopardizing the feasibility of the government’s budgetary scenario for 2025.
Amid the slowdown in economic activity, a paradoxical trend has emerged: household lending volumes are growing at a rapid pace. However, the growth in economic activity and average wages significantly lags behind the surge in lending. Notably, consumer loans have increased by 30.6%, and mortgage loans by 25.8%, far outpacing all indicators related to population income growth.
This imbalance between income levels and the rising debt burden of the population could pose additional risks to the country’s economy in the future.
