Asian Development Bank Forecasts 5% Economic Growth for Armenia in 2025

YEREVAN — According to the Asian Development Bank (ADB), Armenia is expected to see 5% economic growth in 2025. This forecast was announced during a press conference by Don Lambert, Director of the ADB’s Armenia Resident Mission.

Lambert noted that while various prominent institutions conduct economic analyses, they typically use similar methodologies, principles of measurement, and data sources. Although the analyses may differ slightly in nature, their overall indicators generally align with those provided by Armenia’s Central Bank.

Specifically, ADB’s analysis shows that due to a gradual weakening in external demand, Armenia’s economic growth slowed to 5.9% in 2024, down from 12.6% in 2022 and 8.3% in 2023. On the supply side, growth slowed in the services, agriculture, and construction sectors, but industrial activity saw an upswing.

“Global commodity price stability, a stable exchange rate, and prudent monetary policy have nearly brought inflation to zero. However, the current account deficit has widened and is expected to continue growing in 2025. Due to declining external demand, further slowing of growth is anticipated in 2025 and 2026. Inflation may slightly increase due to a more accommodative monetary policy and rising fiscal expenditures. To ensure stability, prudent and forward-looking governance will be essential,” Lambert said.

As of December 2024, 12-month inflation was at 1.3%, significantly lower than the Central Bank’s target of 4.0% ± 1.5. The decline in foreign account balances slowed the growth of broad money supply, reducing it from 17.4% in 2023 to 13.4% in 2024. With a stable exchange rate and relatively steady average interest rates, local currency lending increased by 22.8% in 2024, while foreign currency lending rose by only 5.1%. The annual average inflation rate fell from 2% in 2023 to 0.3% in 2024, reflecting subdued global prices and currency stability.

Armenia’s GDP growth rose from 2.3% in 2023 to 3.8% in 2024. Continued investments in road construction and social infrastructure led to a 5.3% increase in overall GDP expenditures, in addition to a 24.2% increase in 2023. Overall spending rose by 14.6%, while actual expenditures on goods and services decreased by 43.1%. Public debt declined from 50.7% of GDP at the end of 2023 to 50.3% a year later.

The Central Bank’s external liabilities fell by 0.7%, amounting to $6.5 billion—equivalent to 25.3% of GDP, down from 27.8% at the end of 2023. Meanwhile, interstate debt increased from 19.5% to $6.4 billion. This also raised the share of domestic debt by 2.1 percentage points, bringing it to nearly half of the total public debt, in line with the government’s strategy of shifting borrowing to domestic sources. The current account deficit is expected to widen to about 5% of GDP in 2025 and 2026, due to reduced external support factors.

In 2025, the ADB plans to cooperate with the Armenian government across several areas. Most notably, it will support the construction of the Sisian-Kajaran section of the North-South Corridor, investing $250 million into the project.

“We also plan to implement projects in the healthcare sector. Housing is another priority for us. We aim to help provide housing for displaced individuals who arrived in Armenia in 2023. We are closely working with the government on school construction as well. We continue to negotiate with the authorities to expand the outlined programs in the future. Our collaboration will also support the implementation of reforms in both the public and state sectors,” Lambert added.