Armenia continues to face critical economic challenges despite significant progress in macro-economic and structural reforms. The country’s economic growth as measured by gross domestic product (GDP) has been strong; however, export competitiveness, employment, gross national income (GNI) per capita, and energy security are all lower than the regional norm. Many aspects of economic development which are necessary for ensuring the sustainability of economic growth, such as the business enabling environment, private sector capacity, the creation of productive employment opportunities and poverty reduction, have not adequately progressed. Widening disparities in wealth and income have also led to a serious socioeconomic divide on several levels, most notably between rural and urban areas.
In terms of rural economic development, farm and rural non-farm incomes are low and labor is underutilized. While over 40% of the labor force is employed in agriculture, it only contributes to 20% of GDP due to low productivity. The lack of market access in some rural areas not only hinders normal economic activity but also prevents new entrepreneurs from entering the market. Poverty remains a serious problem and it is estimated that 25-50% of the rural population lives at or below the national poverty line. Social hardships and insufficient employment opportunities, particularly outside the capital Yerevan, have triggered outmigration. Thirty to forty thousand Armenians emigrate each year, severely impacting population figures in rural areas and border villages.
Last updated: September 29, 2015