Armenia's economy has been showing stable growth since 2013. Armenia is on average in terms of GDP per capita compared to other Commonwealth of Independent States. On the basis of its per capita gross national income (GNI) of 2020, Armenia is classified in the group of higher middle-income countries by the World Bank.
Armenia has a diversified GDP structure that is well-positioned for sustainable growth. Among the sectors, services boosted growth following an acceleration in tourism output and continued dynamism in trade. The industry also developed strongly, driven by a rebound in mining production. The construction sector was booming for the last few years due to favorable policies adopted.
The Government of Armenia gives priority to the continuity of the business environment's comprehensive reforms, providing favorable investment and business opportunities for foreign investors. Over the past decade, Armenia has carried out serious reforms in property registration, taxation, foreign trade, and power grid connectivity to improve the country’s favorable investment climate and business environment.
Armenia is 47th in 190 countries for its favorable business conditions according to the World Bank's "Doing Business 2020" report, classified 32nd in the Index of Economic Freedom (2021) issued by the Heritage Foundation and is included in the OECD Foreign Direct Investment Regulatory Restrictiveness Index, which is a tool to measure the level of restrictiveness of a country’s regulatory environment to FDI and Armenia has scored quite high, ranked among top 10 freest economies across 70 countries including all OECD and G20 countries.
Armenia has a number of competitive advantages, including a cost-efficient, skilled, educated workforce, low business costs, favorable investment legislation, and access to major markets.
Speaking of the access to major markets, it should be mentioned that Armenia is a member of the Eurasian Economic Union (EAEU), which creates a number of opportunities. Currently, Armenia has simplified access to 183 million-population EAEU single market, with the right to import raw materials from the EAEU member states free of customs duty, has no customs formalities during mutual trade between the EAEU member states, which leads to reduction of financial costs and time for business. No non-tariff measures and technical trade barriers between the EAEU member countries are in place.
The Treaty on the EAEU also stipulates the creation of the single market of services, the liberalization of which will be carried out gradually. The list of 43 service sectors forming the single market came into force on January 1, 2015. A total of 21 service sectors were added to the list for the transition period.
The Eurasian Economic Union is expanding the geography of its free trade agreements with third countries. The goods of Armenian production will have a competitive advantage in the markets of countries with such agreements compared to the similar goods produced in other countries:
- The EAEU signed its first free-trade agreement (FTA) with Vietnam on May 29, 2015 (entered into force on October 5, 2016).
- The second agreement was signed with Iran on May 17, 2018 (entered into force on October 27, 2019). This is a limited agreement valid for a period of three years. A year after its entry into force, the parties will engage in discussions on a full-fledged FTA.
- The Agreement on Trade and Economic Cooperation between the Eurasian Economic Union and the People’s Republic of China was signed on 17 May 2018 (entered into force on October 26, 2019). This is not an FTA agreement, but it does define a single format for trade cooperation between the EAEU and China.
- The EAEU– Singapore Free Trade Agreement was signed on October 1, 2019.
- A Free Trade Agreement between the Eurasian Economic Union and the Republic of Serbia was signed on October 25, 2019.
- There are currently negotiations with Egypt, Israel, and India.
Armenia offers a wide range of preferential trade regimes for investors
- Armenia benefits from the Generalised System of Preferences (GSP) with Canada, Switzerland, Japan, Norway, and the US, as well as the Generalised System of Preferences Plus (GSP+) with the EU. This means that zero or significantly reduced customs duties on certain goods of Armenian origin are exported to these countries.
- Another opportunity is the Trade and Investment Framework Agreement signed between the Government of the Republic of Armenia and the Government of the United States which creates favorable conditions for investments, commodity, and trade promotion between both countries.
- Starting from January 1, 2018, Armenia has joined the European REX (Registered Exporter System) system, which offers Armenian enterprises additional opportunities to export to the EU countries on preferential and facilitated conditions.
- Armenia has concluded free trade agreements with most CIS countries with more than 250 million population.
Furthermore, Armenia deepens its cooperation with European Union. In particular, the EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA) was signed on 24 November 2017. The scope of the new Agreement is comprehensive, including issues of EU competence and interests, which reflects the existing wide range of cooperation in economic, trade, and political areas, and sectoral policies. The Agreement will provide a better regulatory environment, which will improve the business climate and investment opportunities for Armenian and EU companies, by encouraging Armenian companies to sell more goods and services to the EU and the EU companies to open up subsidiaries in Armenia, which will contribute to economic growth and job creation in Armenia.
Armenia has become a unique bridge between the Member States of the European Union and the Eurasian Economic Union: considering a membership to the Eurasian Economic Union and its consequent opportunities, on one hand, and the above-mentioned trade regimes with the European Union, on the other.