Kavkaz Files ISSN 2975-0474 Volume 25 Issue 1
Author: Silvia Boltuc
Armenia’s strategic location, bridging Europe and Asia, has significantly contributed to its economic resurgence, catching the attention of global observers. In 2022, the country recorded an impressive GDP growth rate of 12.6%, positioning itself among the fastest-growing economies worldwide.
Armenia’s strategic focus on economic diversification, innovation, and comprehensive structural reforms underpins this growth. By developing a robust growth foundation across multiple sectors such as Information Technology, Tourism, Agriculture, and Manufacturing, Armenia has cultivated an environment ripe with business opportunities for both foreign and domestic investors.
SpecialEurasia recently convened with Levon Ohanesyan, CEO of Enterprise Armenia, in Yerevan to evaluate the nation’s investment landscape.
Enterprise Armenia plays a pivotal role in this economic transformation, with a mission centered on fostering a supportive investment climate. The organisation aims to enhance Armenia’s appeal as a prime investment destination on the global stage. By actively promoting FDIs and advocating for reinvestment, Enterprise Armenia seeks to drive sustainable economic growth and widespread prosperity.
Could you provide an update on the current status of the Armenian economy?
“Overall, Armenia’s recent economic performance is characterized by rapid growth and continuous diversification.
Armenia has registered an average GDP growth rate of 8.7% in 2023. Despite a temporary setback in 2020 due to the global COVID-19 pandemic, the Armenian economy has shown resilience and a swift recovery, achieving record-high growth rates in the subsequent years.
Armenia’s diverse economy is driven by significant contributions from the service and trade sectors, particularly in IT and tourism, as well as agriculture and industry, positioning Armenia well for continued growth. The government has set a confident 7% target for further GDP growth in 2024. Economic activity in Armenia has also seen a notable increase, with a robust 9.8% growth rate recorded last year.”
During our last visit in October 2022, we acknowledged that the Russian migration had a positive impact on the Armenian economy, despite some socioeconomic consequences. How is the country coping with these issues?
“As you know, Enterprise Armenia serves as a “One-Stop-Shop” for both local and international investors and anyone interested in doing business in Armenia. In 2022, we received over inquiries from over 350 businessmen interested in expanding their business from Russia to Armenia. It is noteworthy that the agency also provides aftercare services to already operating companies with foreign capital. From this framework, currently, 40 companies are being served in our aftercare support service. However, only 4 of these companies are Russian; the rest are mainly companies with Western capital that have expressed a desire to relocate from Russia to Armenia.
Within the framework of Enterprise Armenia’s aftercare service, we also identify systematic problems and provide policy advocacy to the government. This creates a well-functioning toolkit for the further integration and adaptation of foreign companies into the existing system. Hence, I believe the Armenian business environment is flexible and effectively addresses any issues related to the impacts of international capital.”
How do Armenia’s membership in the Eurasian Economic Union and the partnership agreement with the European Union support the country’s economy?
“Armenia’s membership in the Eurasian Economic Union (EEU) and Armenia’s partnership agreement with the European Union (EU) strengthen the country’s economy by providing access to major markets and fostering diversified economic relations. These alliances enable Armenia to exceed its relatively small domestic market of 3 million consumers and serve as a gateway to major markets.
Additionally, Armenia benefits from various trade agreements and initiatives that expand its global economic reach. The Trade and Investment Framework Agreement (TIFA) with the United States promotes trade and investment between the two countries. Armenia also enjoys GSP preferential duty-free access to numerous countries, enhancing its export competitiveness to the USA, Japan, Canada, Switzerland, and Norway.
Furthermore, Armenia has Free Trade Agreements (FTA) with 14 countries, contributing to remarkable export growth. In 2023, Armenia registered a 55.3% increase in exports.”
Given Armenia’s significant reliance on Russia for import-export, how have Western sanctions impacted the Armenian economy, and what measures are being taken to manage these challenges?
“There are no direct sanctions against Armenia, and I think it is too early to fully understand and assess the scope of indirect impacts. The interconnected nature of the economies and the evolving geopolitical landscape make it difficult to measure the full extent of the effects at this time.”
What are the main investment opportunities for foreign companies in Armenia?
“Currently, Armenia conducts an Open-Door policy toward Foreign Direct Investments and we have one of the most liberal regimes among emerging markets. The government’s commitment to economic reforms and the availability of various incentives further enhances the attractiveness of the investment landscape.
Foreign companies exploring investment opportunities in Armenia can find promising opportunities in several key sectors. For instance, Armenia’s IT industry, which experienced a remarkable growth rate of 41.4% in 2023 compared to 2022. Its growth is fueled by a skilled workforce and a supportive business environment. Investment opportunities include such activities as software development, cybersecurity, artificial intelligence, and other high-tech fields.
Additionally, agriculture plays a significant role in Armenia’s economy, contributing 8.4% to the GDP in 2023. The sector benefits from three key incentives and nine state support programs, making it an attractive area for investment. Opportunities in agriculture include farming, food processing, organic agriculture, and agricultural exports.
The pharmaceutical industry is also steadily expanding to meet the growing demand for healthcare products and services. Investment possibilities in this sector include manufacturing for generics and healthcare services.
I would also like to mention that regardless of their choice of sector, Enterprise Armenia is fully committed to provide comprehensive support to Investors. Our agency offers a range of services designed to support them in every step of the investment process.”
For further information, reports, and analyses about Armenia, feel free to contact us at info@specialeurasia.com and request a consulting meeting.
