Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last Published: 2/12/2019

Armenia is a small market, facing difficult challenges based on its geography and the ongoing hostilities over Nagorno-Karabakh that has closed two of its four borders.  U.S. goods and services compete successfully for market share and there has been a significant increase in U.S. investment in Armenia over the last five years, particularly in the energy and mining sector.  Unexpected political changes in April and May 2018 have not adversely affected the market, and new political will, if sustained, could positively address long-term systemic concerns about corruption and distortions to the market by politically-connected businesses.

In May of 2015 the United States and the Armenian Government signed a Trade and Investment Framework Agreement (TIFA). The TIFA provides a strategic framework and principles for dialogue on trade and investment issues. The agreement creates a platform to meet and discuss issues of mutual interest with the objective of improving cooperation and enhancing opportunities for trade and investment and provides high level government engagement for protecting business interests in both countries.

The Republic of Armenia became a member of the Russian led Eurasian Economic Union (EAEU) on January 2, 2015.  This membership provides Armenian products direct access to the Russian, Belarussian, Kazakh, and Kyrgiz markets with a combined population of over 175 million and a combined gross domestic product (GDP) of 2.2 trillion USD.

In November 2017, the European Union and Armenia signed the Comprehensive and Enhanced Partnership Agreement (CEPA)  aimed at significantly deepening their relations. The new agreement is expected to improve the investment climate, stimulating growth and jobs and create better regulatory environment for businesses to grow.

With international donor assistance, the Armenian government has been implementing a program of reforms aimed at attracting trade and foreign investment by improving the business environment and tax and customs administration. As a WTO member since 2003, Armenia has the most liberal investment regime among EAEU countries making it an attractive location from which to base international and regional operations focused on EAEU markets. The country has GSP access to the U.S., EU, and Japan, and a Free Trade Agreement with neighboring Georgia which remains available even after Armenia’s accession to the EAEU.

Armenia’s gross domestic product grew 7.5 percent in 2017 to $11.6 billion, the largest annual expansion in a decade after close to zero growth in 2016. According to the World Bank country snapshot, growth was driven mainly by a recovery in the external environment and supported by a strong rebound in domestic demand. Consumption benefited from higher incomes and a recovery in overseas remittances, particularly due to the moderate recovery in Russia and firming of international metal prices.  Although the economic outlook is positive, Armenia’s vulnerability to economic conditions in Russia and its other trading partners will remain high, and, together with its low level of export diversification, present a downside risk for sustainable economic growth. In anticipation of sustained favorable external economic conditions and continued robust structural reforms by the new government, medium-term growth is forecast to be around 4%, based on private sector, export-led activity. In particular, the agribusiness, information and communications technology (ICT), and tourism sectors are expected to deliver solid growth as efforts to increase competitiveness and connectivity start to deliver results. Armenia is classified as an upper middle income country by the World Bank, with a per capita GDP of around $3,813.

The service and industrial sectors were the main drivers of GDP growth in 2017 with each registering 10.1% growth.  The service sector contributed 5.1% and industry sector 1.8% of overall economic growth. Much of this growth came from the export-oriented mining and metallurgy sector which saw  the opening of new mines. The IT sector had 13.6% growth in 2017 with 80.1% of the total volume of IT-sector revenues coming from the services provided. The construction sector, which had been in decline since 2009 ( reporting only a slight rise of 0.2% in output in 2014) grew by 3.1% in 2017 contributing 0.2% to the overall annual growth. However, the agriculture sector which accounts for more than a quarter of the economy declined by 4%. After two years of deflation (1.1% in 2016, and -0.1% in 2015), inflation in Armenia in 2017 was 2.6%  largely triggered by an increase in food prices.  The average monthly salary in Armenia was about $370 in 2017.

Overall foreign trade turnover grew by 26.9% to  $6.425 billion in 2017, with imports making up $4.18 billion (a 27.8% increase compared to 2016) and consisted mainly of petrochemicals, precious stones, consumer goods, food products, equipment, and machinery.  According to Armenian official statistics imports from the United States increased by 60.3 % to $117.5 million in 2017 ranking the United States among the top 10 importing countries to Armenia  (after Russia, EU, China, Turkey, Iran, UAE, Switzerland and Georgia).  Imports have also risen from Russia, the EU, China, Turkey, the UAE and Iran.

In 2017 Armenia exported $2.24 billion in goods (a 25.2% increase compared to 2016) including metal mining, food products and cut precious stones. The top ten importers of Armenian goods and services were Russia, the EU, Georgia,  Iraq, China, Iran, Switzerland, USA and the UAE. Exports to Russia rose by 44.6%, to the United States by 76%, to the UAE by 61%, to Switzerland by 365% (due to new gold exports) and to the EU by 32.2% in 2017.  The U.S. imports from Armenia amounted to $68.5 million in 2017.  Armenia’s imports from the United States in 2017 included mainly machinery and equipment, vehicles, chemical products, and textiles. Armenia's primary export items to the U.S. were precious stones and metals (including aluminum foil), textiles, and prepared food products.

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