ADB forecast for Armenia։ Sharp decline in agriculture and investment sectors coupled with inflation

Growth in Armenia moderated amid softer demand. Strong construction, supported by public infrastructure and real estate activity, and a rebound in industry partly offset slower services growth and a contraction in agriculture, according to the Asian Development Bank’s (ADB) forecast for the country.

Forecasts remain unchanged at 5.0% for 2026 and 5.5% for 2027, supported by domestic demand, construction, services, and tourism.

Armenia’s deficit stood at 12.6% of GDP amid trade disruptions․ Growth remained broadly stable despite softer demand, edging up to 6.0% in the first half of 2026 from 5.9% a year earlier.

Construction growth eased marginally to 20.2% from 20.7% a year earlier but remained robust, supported by continued infrastructure investment and residential construction. Growth in services slowed to 6.0% from 7.0% a year earlier. This occurred as moderation in wholesale and retail trade, information and communication, finance and insurance, and professional services more than offset gains in transportation and warehousing, tourism-related activities, and administrative and support services. Agriculture plunged by 11.0%, reversing growth of 5.9% a year earlier, as crop  production fell.

Total investment growth slowed sharply to 0.4% in the first half of 2026 from 25.2% a year earlier, as growth in fixed capital formation was largely offset by a drawdown of more than 50% of inventories. Import restrictions imposed by Russia and regional trade disruptions from the Middle East conflict will constrain growth. However, domestic demand, expansion in construction and services, rising tourism, and continued fixed investment should support growth over the forecast horizon. Accordingly, growth forecasts for 2026 and 2027 remain unchanged․

Inflation accelerated in the first 7 months of 2026, reflecting higher global food and commodity prices and disruptions to regional trade routes. Average inflation rose to 4.5% in January–July 2026 from 3.2% a year earlier, amid a 7.5% increase in food prices.  Services prices rose by 2.6% and for other goods by 1.6%. Year on year inflation, at 4.5% in July 2026, was above the Central Bank of Armenia’s 2%–4% target range.