The "Fact" daily writes:
Armenia's economic situation in the first months of 2025 shows a number of emphasized tendencies, which, combining each other, gives clear signals about the structural and operational problems of the national economy.
If in 2022 - 2023, Armenia enjoyed the fruits of high economic growth due to financial flows in Armenia, particularly by the Russian-Ukrainian war, and the increasing volume of consumption, especially since the start of 2025, the growth slows down. This slowdown not only reflects the balancing of the artificially stimulated economic movement in previous years, but also proves that Armenia's economy has failed to form institutional basis, which would provide conditions for stable and long-term development.
The slowdown in economic growth, expressed in GDP, states that its main driving forces have been the result of a short-term, not so industrial or technological transformation as a result of dependence on the foreign market and cash flow. In the first quarter of 2025, the data show about 4.1% growth in the economic activity index, significantly 3.5 times yielded to the results of the same period last year.
However, even such an indicator could have a sign of stability if it took place in parallel to build structural reforms, increasing productivity and diversification of export. Unfortunately, the slowdown is directly accompanied by the complicacy of the economic environment. The decline in the growth rate of provision is also a direct consequence of the deterioration of the economic environment.
In particular, in the first months of 2025, both imports and export dynamics were due to the decline in foreign demand (particularly in the markets of Russia and EEU countries) and the restriction of the domestic production potential.
The latter's reason is not only the scarcity of material or technological resources, but also management inefficiency. Export diversion remains as a declared purpose, but not implemented strategy. And this is combined with another worrying circumstance, in the conditions of the devalued money, is becoming more uncompetitive due to the deepening of price competitiveness in international markets. Inflation continues to be a matter of concern.
The Central Bank announces that the 12-month inflation in February 2025 was 2.5%, and in March 3.3%, returning to the target range. However, there is a deep imbalance behind these numbers. The most consumed goods and services in the consumer basket continued to rise in price, especially about food products and fuel. It is no coincidence that the largest increase in food prices in the EEU was recorded in Belarus and Armenia. And such an infer rate affects low and middle-income classes, as the weight of these products in the structure of their consumption is significant.
The issue of state efficiency is no less important in ensuring socio-economic development in the country. But the budget underway is to remain one of the government's systemic problems.
In the first quarter of 2025, the Luys Foundation presented the analysis of the budget revenues and the dysonance of the dissonation in the analysis of the budget revenues and expenses within the framework of the RA State Budget.
Especially in the direction of capital expenditures, there is not only a high level of non-fulfilled programs, but also the efficiency of these expenses in terms of terms. Many programs are prolonged, in some cases even starting and never completed. This is a circuit-like process that comes from previous years.
For example, according to financial control bodies, the underfunctioning of capital expenditures in 2024 exceeded the underpayment rate of current costs 3.2 times, which testifies to the poor planning system, and on the other hand.
In the first months of this year, despite the fact that the growth of budget revenues has been increased, there have been free funds in the budget, and the expenditures on the most important programs have been underway.
Meanwhile, full implementation of various programs could be fully implemented. From this point of view, it is problematic that often the measures taken by state funding do not have any measurable economic results.
Very often they are implemented, but do not provide efficiency. In some cases, the main emphasis is carried out on a short-term social effect or political influence, instead of long-term investments, especially in the fields of education, science, innovation industry, remain secondary.
At the same time, the tax system, although it provides some efficiency in terms of increasing the level of revenue collection, but has not yet become a tool that strengthens economic activity. The governing bodies are still prone to administrative funds to provide budget revenues without making it a stimulating factor for the business environment.
As a result, the country's investment environment remains unstable, and the trust of state policy is low. And if these reforms are not fulfilled by deep manifestations and systemic logic, the country's economy will continue to face the same chutters who have been obstructing our development opportunities for years.
Arthur Karapetyan
