Armenian economist warns growth masks rising long-term poverty risk

(Horizon Weekly) – Armenia has recorded strong economic growth since 2018, but the gains have not translated into a meaningful reduction in poverty. Prime Minister Nikol Pashinyan recently said Armenia’s economy has grown by about 50% since 2018. However, data from the Statistical Committee show that poverty has declined only marginally and remains broadly unchanged. Poverty stood at 23.6% in 2018, while in 2024 it was estimated at 21.7% under a revised methodology that the agency says is not comparable with earlier years.

“This means poverty may even have worsened under the old methodology despite economic growth,” economist Suren Parsyan, a lecturer at the Armenian State University of Economics, told Panorama.am on Monday.

Parsyan said Armenia’s growth has been volatile, pointing to a 7.4% contraction in 2020 driven by the COVID-19 pandemic, the war with Azerbaijan and policy inefficiencies. From 2022, the economy posted double-digit growth largely due to external factors, including the relocation of Russian capital and businesses to Armenia.

He said the main beneficiaries of this growth were the banking sector, re-exporters and construction companies. Armenia’s banking system reported a record 353 billion drams ($900 million) in net profit in 2024, fueled by servicing Russian capital flows. An influx of Russian relocants also boosted the rental and real estate markets.

“Growth did occur, including from gold re-exports, but its quality is deeply concerning,” Parsyan said. “Economic growth is not an end in itself; it should improve living standards.”

Despite high growth, poverty remains widespread, with extreme poverty at 0.6%. Parsyan highlighted that poverty is especially prevalent among families with three or more children, warning that one in three children in Armenia lives in poverty.

“These children often lack access to adequate nutrition, education and healthcare, increasing the likelihood that they will remain poor as adults,” he said. “We are laying the foundations for future poverty.”

Parsyan stated that Armenia’s recent growth has benefited a narrow group, while failing to deliver significant improvements in living standards or demographic outcomes for the broader population.