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Madrid

Labor market reduction, restriction of the state budget. What is expected of the Armenian economy?

Vahe Davtyan wrote: Professor, Professor, Energy Security Expert.

"According to the latest data of the RA Statistical Committee, 2024 In the real sector of Armenia, the net flow of general foreign investments has decreased and has become negative, amounting to $ 285.6 million (113.3 billion drams) compared to 2023. Positive $ 479.3 million (194.3 billion drams). This annual decreases more than 2.6 times. This proves a lack of trust in Armenia's investment environment.

This negative trend is particularly noticeable in direct foreign investment, whose net flow in 2024 amounted to $ 112.9 million (44.8 billion drams), decreasing from $ 624.1 million last year (253 billion drams).

The sharp decline in the flow of the main investment partners, Russia and the United Arab Emirates (UAE) has become the main factor of these negative dynamics. In particular, the net flow of total investments from Russia continues to decrease in 2024, reaching US $ 156.3 million (62 billion drams). The most worrying is the fact that the net flow of Russian direct foreign investments has also become negative, amounting to $ 215.1 million (85.2 billion drams) decreasing 4.8 times compared to the previous year.


Moreover, the net flow of total investments from the UAE was almost zero, from $ 257.6 million (104.3 billion drams) to $ -23.5 thousand (9.3 million drams). It is also a similar situation in direct investment, $ 248.9 million (100.8 billion drams) to $ 23.4 million (9.3 billion drams).

The above-mentioned figures and trends indicate that the Armenian authorities do not have a long-term, systematic and reliable economic strategy that would allow and develop the process of involving foreign capital. Investors are important not only for tax benefits or labor cost factor, but also a stable and predictable economic and political environment, which today, is not in good condition in Armenia.

All this is fraught with serious macroeconomic consequences, investment crisis, slowdown in economic growth, reduction of labor market and state budget restrictions. In the event of deepening such trends, Armenia may be out of investment map of the region in the coming years. "