"Fact" daily writes:
During 2025, Armenia's economy showed a picture of complex, but at the same time, contradictory developments, which, on the one hand, is characterized by a fairly high growth rate of economic activity, on the other hand, by the structural problems of this growth and the problematic nature of stability. The analysis carried out by "Luys" Foundation reveals this picture in detail. According to the annual data, the gross added value was 9.1 percent, which was about 1.1 percentage points higher than the previous corresponding indicator of 2024.
At first glance, these numbers may inspire optimism and indicate an economic upswing, but a deeper analysis reveals the fundamental problems hidden behind these statistical indicators, which cause serious concerns for the long-term prospects and stability of the country's economic development. The dynamics of economic growth in 2025 was particularly notable for its uneven distribution over time, as growth rates accelerated significantly at the end of the year.
This phenomenon was mainly caused by the recovery of industrial production volumes, but this recovery also has its own characteristics and problematic aspects. In the industrial sector, a significantly accelerated growth rate was observed in the last months of the Manawad year, when, according to December data, it reached 38.6 percent, which in turn had a significant impact on the overall economic activity indicators. But beneath these impressive numbers lies a very important circumstance that fundamentally changes the assessment of this growth and shows its true nature. A significant part of the growth of the industrial sector, namely 19.9 percentage points, according to the November data, was due to the exceptionally high growth of the sub-sector "production of basic metals" in the amount of 2.9 times. Although this figure is statistically impressive, it does not actually reflect an actual expansion of production potential or the development of industrial capacity, but mainly an increase in the volume of gold re-exports.
Re-exporting, as is known, represents an economic activity that does not create significant added value for the local economy, and the volume of which can fluctuate significantly depending on international market conditions, geopolitical situation and other external factors that are beyond Armenia's influence and control. This reality shows that the dynamics of Armenia's economic activity continues to be highly dependent on external factors and conjunctural fluctuations, which raises serious concerns from the point of view of the country's economic independence and stability. When such a large part of economic growth is based on non-sustainable factors such as gold re-exports, it means that this growth does not have a solid foundation and can quickly be neutralized or even replaced by a recession if external conditions change.
It is no coincidence that when re-export rates begin to decrease, recessionary moods are immediately felt in the economy. Moreover, economic growth based on the re-export sector does not contribute to the increase of long-term economic potential, the expansion of productive capacities, technological progress or the improvement of the qualifications of the labor force, that is, the development of all those factors that can truly ensure sustainable and long-term economic development. Such a situation, in turn, shows that no effective steps have been taken over the years in the direction of diversification of the economy, improvement of the export structure, and development of domestic production potential.
In the field of public finance, the year 2025 also brought its own special challenges and revealed serious problems in the field of budget planning and management. Although the collection of state budget revenues exceeded the planned and tax revenues were collected almost as planned, which can be considered a positive trend and show a certain efficiency of the tax collection system, however, the picture of the overall performance of the state budget is much more complex and problematic.
The deficit of the state budget deviated from the initially planned indicators by around 30.6 percent, which is an extremely large deviation and indicates the presence of serious problems in the budget planning process. This significant deviation was due to high under-implementation of public expenditures, which in turn raises serious questions about the efficiency of public administration, the capacity to implement programs and the optimal use of budget funds. It is also important to note that the underperformance of budget expenditures has negative consequences for the economy, as public expenditures, especially capital investments and development programs, have additional potential in terms of economic activity, job creation, and infrastructure development.
In the context of capital expenditure performance, 2025 showed some improvement compared to previous years, which may indicate some reforms in public expenditure management. However, this improvement was largely due to the large share of Defense Department spending. While defense spending is undeniably important and necessary, the effectiveness of financing civil infrastructure, social programs, education, health, and other areas is also essential to economic development.
A more detailed and in-depth study of the state budget will certainly be possible after the official publication of the annual budget report, when complete and detailed data on all categories of budget revenues and expenditures, financed programs, implemented reforms and registered results will be available. However, the data already available now is sufficient to understand that the performance of the state budget is far from optimal and requires serious attention and improvements both in the planning process and in the stages of implementation and execution.
ARTHUR KARAPETIAN
Details in today's issue of "Past" daily.
