World Bank: Armenia’s economic growth is strong, but its benefits remain uneven

In recent years, the impressive economic growth recorded in Armenia has not benefited all residents of the country equally. Although the poverty rate has declined, these gains remain fragile: a significant share of households, while positioned slightly above the poverty line, remain highly vulnerable to shocks and have limited capacity to build resilience.

Senior economist Armine Manukyan highlighted this issue during a press conference on July 29, while presenting the key findings of the World Bank Group’s new report titled “Armenia’s Economic Pulse: Pursuing Poverty-Reducing Growth with More Impactful Fiscal Policy.”

“Armenia’s economic growth in recent years has been quite impressive. The poverty rate has been declining, the unemployment rate has also been decreasing, as the indicators show, and fiscal policy is fulfilling its redistributive role and having some impact on poverty reduction. However, despite all this, the benefits of high growth are not equally accessible to everyone. A significant share of households is just above the poverty line, which we consider vulnerable. Although the unemployment rate is declining, the employment rate has remained stagnant and is not increasing—it is at around 50 percent. Fiscal policy can become more effective and more targeted and have a greater impact on poverty reduction,” said Armine Manukyan.

According to her, the unemployment rate, which had remained at around 18 percent until 2019, has declined to 12.8 percent, but this level is still considered very high.

“Alongside the decline in the unemployment rate, the employment rate of the population has not increased. The employment rate is calculated as the ratio of the number of employed people to the total population aged 15–74. If the number of people aged 15–74 increases, but the employment rate does not rise proportionally, the employment indicator declines,” the economist emphasized.

Manukyan noted that not only the employment rate but also the characteristics of the labor market are important. According to her assessment, one of the distinctive features of Armenia’s labor market is that only 37 percent of the working-age population—people aged 15–74—are employed under formal written contracts. Meanwhile, in the countries of Europe and Central Asia, this figure averages 45–50 percent.

“It is also clear that salaried employees with formal contracts are concentrated in urban areas, while in rural areas people mainly work as self-employed individuals or as unpaid contributing family workers,” Armine Manukyan stated.

It was also noted that real wage growth in Armenia has occurred mainly in sectors requiring advanced professional skills, particularly IT and finance.

“In 2022, Armenia’s economic growth amounted to 12.6 percent, while in 2025 it was 7.1 percent. Economic growth has been driven mainly by the services sector, particularly financial services, insurance, IT, and professional services. Construction has also made a significant contribution to economic growth. In the industrial sector, mining recorded particularly strong growth this year,” she noted.

This World Bank Group report is one of the regular reports in the “Country Economic Update” (CEU) series, which is dedicated to monitoring socio-economic developments and promoting informed dialogue on economic policies and prospects. The report notes that the purpose of Armenia’s CEUs is to provide a continuous, comprehensive, and concise analysis of recent economic developments and the country’s economic outlook, as well as an in-depth examination of specific structural issues requiring the attention of policymakers and stakeholders.

The report is generally published twice a year, in the middle and at the end of each year. It usually consists of two sections: a summary of recent macroeconomic developments and a special topic section. This year’s special topic is titled “Poverty, Distributional Impacts and Fiscal Policy Constraints.”