Armenia’s integration into Middle Corridor projected to increase GDP and employment

As a result of integration into the Middle Corridor (Trans-Caspian International Transport Route), Armenia’s gross domestic product (GDP) could increase by 3.40% by 2040, while employment could rise by 3.90%, according to projections presented in the World Bank’s report on the development of the Trans-Caspian Transport Corridor.

The World Bank report places particular emphasis on Armenia’s strategic position, which gives it an opportunity to enhance its role in regional connectivity and international trade. The report highlights that in 2023, the Armenian Government presented the Crossroads of Peace initiative, which aims to achieve long-term peace and prosperity in the region through “direct trade, transport and communication links between Armenia and its neighbors.”

Armenpress spoke with Arshaluys Harutyunyan, Head of the Macroeconomic Policy Department at the Ministry of Finance of Armenia, about the projections concerning Armenia presented in the report. According to him, integration into the Trans-Caspian Transport Corridor will primarily lead to a reduction in trade costs, bringing economic benefits to Armenia.

“When a country becomes part of the global transport network, this implies investment attractiveness, which, in turn, will lead to production growth. In addition, the transport network and hubs will not operate in a vacuum; economic activity will take place around them. Various types of services will also be needed to handle freight flows and the economic activity associated with them, which will contribute to economic development,” Harutyunyan said.

The report also emphasizes that Armenia’s borders with Azerbaijan and Türkiye, which account for approximately 83% of the country’s land borders, have been closed for decades, with freight transportation carried out mainly through Georgia. It particularly stresses the importance of diversifying transport systems, routes and modes of transport to ensure long-term economic resilience.

The report notes that Armenia’s trade is heavily concentrated along a limited number of routes. In 2023, more than 80% of Armenia’s total trade was transported by land (road), with more than 65% of that volume, approximately 3.3 million tons, passing exclusively through Georgia. Another 1.1 million tons of cargo was transported via the railway connection with Georgia. Maritime trade, conducted mainly through Georgian ports, amounted to 2.4 million tons.

Addressing Armenia’s logistical challenges related to exports and imports, Arshaluys Harutyunyan stressed the importance of implementing the TRIPP project. The multimodal transit route, named the Trump Route for International Peace and Prosperity (TRIPP), will pass through southern Armenia, through Syunik Province. According to the Ministry of Finance official, TRIPP will significantly diversify Armenia’s logistics system.

“The World Bank report states that an additional $25 billion in investment is needed for the full operation of the Middle Corridor, covering 16 priority areas. Notably, one of these 16 areas is the railway network that will pass through southern Armenia. The report estimates the implementation of this network at $2.7 billion.

“The report also states that $30 billion in investment is needed to ensure the full operation of the Trans-Caspian Transport Corridor and stimulate economic activity. Representatives of the private sector could implement around 66% of the investments intended for additional economic activity,” Harutyunyan emphasized.

The Ministry of Finance representative added that integration into the Middle Corridor requires not only the creation of the necessary infrastructure but also digital interaction with the countries involved in the corridor, through which regular freight transportation will be carried out.

The report also emphasizes that by restoring key routes and opening border crossing points with Azerbaijan and Türkiye, Armenia could regain access to diverse rail and road corridors.

According to the World Bank, these connections will not only strengthen Armenia’s trade resilience but also increase the country’s role in regional transport systems, thereby contributing to increased investment and the creation of new jobs.