Economy of Armenia

Armenian economy: history and development

After gaining independence Armenia "inherited" absolutely unviable economy from the Soviet system and found itself in the heaviest situation of all countries of Transcaucasia. From the agrarian-industrial country with developed metal working, mechanical engineering, chemical, light, the food-processing industry Armenia turned into a small state which could not boast neither rich natural resources nor favorable geographical position or fertile soils. Without own oil and gas the landlocked Armenia was under economic blockade since because of the Nagorno-Karabakh conflict it was cut from Azerbaijan and Turkey, and because of Georgian-Abkhazian conflict – from Russia (the entire cargo transportation was used to be carried out via Abkhazian railway).

В 1991 the privatization began. The first were agricultural grounds, then came small and mid-sized industrial enterprises, and in 1995 – the major ones were privatized.

In 1994 after the conclusion of armistice with Azerbaijan and obtaining funds from IMF and the World Bank the national economy was gradually stabilized. Inflation rate decreased, the GDP went up a little.

A number of industrial enterprises were put into operation.

Economic of Armenia -development directions 

Today's Armenia is the industrial -agrarian country. The priority belongs to small-scale agricultural production. The country's GDP consists of agriculture – 31.1 %, industrial production – 21.8 %, trade - 8.7 %, construction – 8.5 %, transport – 5.1 %, other sectors - 24.9 %.

The leading industries are mechanical engineering and metal working, chemical and petrochemical, nonferrous metallurgy, manufacture of building materials (including the ones based on the deposits of tuffs, pearlites, limestones, granites and marbles), foodstuffs and light industries.

Agricultural grounds occupy about 44 % of all lands. The basic crops are melons and watermelons, potatoes, wheat, grapes, fruits, essential oil plants, tobacco, and sugar beet. Livestock sector specializes on dairy-meat cattle breeding, and sheep – breeding in the mountains.

Economy of Armenia is based on 5 regions which differ in natural and economic-geographical conditions and industrial specializations.

Ararat (electric power, mechanical engineering, chemical industries, manufacture of building materials, and agriculture), Shirak (textile industry, mechanical engineering; livestock), Pridebed (copper, chemical industry; agriculture, mechanical engineering), Sevan-Agstevi (electric power, livestock, grains and tobacco), Syuniq (mining industry, agriculture, hydroelectric power industry and mechanical engineering).

The main industrial centre of Armenia is Yerevan followed by Gyumri and Vanadzor.

In the foreign trade import prevails. Main exports are processed brilliants, machinery and equipment, copper ore. Imported are gas, oil, foodstuffs, etc. The major trade partners in export: Belgium, Russia, Iran, Turkmenistan, the USA, Georgia; import- Russia, the USA, Great Britain, Iran, Turkey, Belgium.

Goods turnover with Russia is about 20 % of the entire foreign trade of the republic.

Many large Armenian enterprises belong to Russian companies.

National currency of Armenia

In November 1993 the new monetary unit – dram was put into circulation.

1 dram = 100 lum