The 1991 dissolution of the Soviet Union was the detonator of the serious Armenian economic decline. Armenia was deprived of its traditional outlets, since under the Soviet planning system, 90 % of its economic relations were performed within the Soviet Union, and more particularly with Russia and the Ukraine in the defense sector.

In 1992, the Armenian government had however launched an ambitious project financed by the IMF, followed by an economic policy of stabilization, and then by a new ambitious economic program in 1994. During these years, the country suffered a four-digit inflation and the GDP fall exceeded 20 % per year.

Thanks to the liberalization of the national economy and trade, to a orthodox economic policy and to a strong international aid assistance, in particular coming from the United States, Armenia managed to reduce inflation, to stabilize the exchange rate of the dram and especially to achieve a very strong GDP growth rate. The current account deficit has decreased thanks to the growth of exports and the high level of transfers of incomes coming from the diaspora.

Regarding energy, Armenia remains dependent on Russia and on its other suppliers. The economic development is also slowed down by the lack of reorganization of the industry and of the Public administration, in particular with regard to the weakness of the tax collection.

Source: Cofacerating