Armenia’s economic growth will slow to 5% in 2025 according to the Asian Development Bank (ADB).

The ADB, in its Asian Development Outlook (ADO) April 2025 report, predicts economic growth in the country will continue to slow in 2026, reaching 4.7%.

In 2022, Armenia's economic growth was 12.6%, in 2023 - 8.3%, in 2024 - 5.9%. Growth has slowed in several sectors of the economy. The slowdown is more obvious in the services sector.

The slowdown in economic growth expected in 2025-2026 is primarily due to the weakening of the influence of external factors.

While external factors significantly contributed to Armenia's high economic growth in 2022-2023, the influence of these factors has now weakened.

Due to the Russian-Ukrainian war that began in February 2022, Russia found itself under Western economic sanctions. Several Western countries, completely or with some restrictions, banned direct trade, bank transfers, and investments with Russia. Armenia became one of the main transit countries for Russia to organize these economic processes.

According to the Asian Development Bank, Armenia's economic growth will be based on domestic demand. The services sector will contribute significantly to growth. The contribution of the industrial and agricultural sectors will be more "modest".

Inflation in Armenia will accelerate

The average inflation in Armenia was 0.3%.in 2024 according to the country’s Statistical Committee.

The ADB considers the low inflation in Armenia in 2024 to be the result of the deflation of some goods in international markets and the monetary policy pursued in Armenia. After raising the refinancing rate for a long time, Armenia’s Central Bank began to lower it in mid-2023. With this tool, the bank tried to control inflation.

The indirect effect of raising the refinancing rate in conditions of high inflation is to make loans more expensive and curb consumption, which can also lead to a slowdown in price growth. And when inflation weakens, the bank uses the opposite strategy: it lowers the interest rate. This is precisely monetary policy.

The ADB predicts that inflation will accelerate in Armenia this year, reaching 3%. This will be within the 3% target set by Armenia’s Central Bank. According to the bank, 3% (±1 percentage point) inflation is an “acceptable” range for the economy.

Top photo: Saro Baghdasaryan