Background

In late April 2026, Russia imposed restrictions on Armenian mineral-water exports, particularly the Jermuk brand, marking the first significant measure against Armenian goods that year. In late May, the restrictions expanded to include flowers, alcoholic beverages, and additional mineral water products, affecting several export-oriented sectors. By June 12, the measures had intensified. They were affecting fruits, vegetables, berries, fish products, and other goods, forcing Armenian exporters to confront the loss of a traditional Russian market and the difficult challenge of entering new or alternative markets, including the European Union.

Because a significant share of Armenian producers had long been oriented toward the Russian market, many had limited incentives to comply with the EU acquis or to diversify export destinations to secure higher export receipts. The Government of Armenia responded urgently with measures to assist businesses and farmers. The decisive factor in any reorientation toward Western and Gulf markets will be alignment with EU standards and regulations.

In the short run, the consequences for farmers and producers could be severe and could weigh on GDP growth. Over the medium and long term, the willingness of farmers and businesses, the government's commitment, and assistance from the European Commission will play a crucial role in transforming Armenian business and production practices in line with the EU acquis, with the potential to support modernization, diversification, and growth.

Evolution of Restrictions by Phase

Phase 1 (April 28-May 21, 2026): The first stage of restrictions began on April 28, 2026. The measures targeted Armenian bottled mineral-water exports, particularly the Jermuk brand. Russia cited technical and regulatory concerns related to mineral-water composition and labeling requirements, resulting in the suspension of certain batches.

Phase 2 (May 22-June 12, 2026): Beginning on May 22, 2026, the restrictions expanded to include a wider range of products, including Armenian flowers, alcoholic beverages such as wine, brandy, and additional bottled mineral water products. From the end of May through June 12, 2026, the scope widened considerably. The affected categories included fresh vegetables such as tomatoes, cucumbers, peppers, potatoes, and eggplants; herbs; berries; stone fruits such as strawberries, apricots, cherries, peaches, nectarines, and plums; grapes, apples, and pears; dried fruits; fish and fish products; seeds; fertilizers; timber; and other agricultural and food products. This phase can be described as a large-scale restrictive phase, approaching a near-complete ban, making several export-oriented sectors extremely vulnerable to the loss of export receipts. These sectors include beverages, horticulture, floriculture, fruit and vegetable production, fisheries, food processing, and agricultural inputs.

Exports of Affected Products and Potential Consequences for Rural Communities and Export Sectors

The Russian import restrictions primarily affect exports in 10 HS chapters (see Table 1), which amounted to about $637 million in 2025. This represented around 22% of Armenia's exports to Russia, which totaled $2.92 billion that year. Moreover, many of the affected products in these HS chapters are seasonal, with shipments concentrated mainly from May to December. Although the restrictions were imposed mainly in May and June 2026, their economic effects are expected to be felt during the peak export season, with lower farm-gate prices, higher post-harvest losses, and reduced processing activity.

The export value of these HS chapters and their share of total exports to Russia may understate the potential socioeconomic consequences of losing the Russian market. The affected sectors are highly concentrated in agriculture, food processing, fisheries, floriculture, and beverages. These sectors are closely linked to rural employment and regional livelihoods.

The restrictions would severely affect rural communities outside Yerevan, especially in Ararat and Armavir provinces, and other provinces to varying degrees. Many of the affected sectors are labor-intensive and support thousands of smallholder farmers who supply larger exporters, seasonal workers, transport providers, cargo shipping companies, storage facilities, major exporters, and food-processing companies, including beverage manufacturers. Some manufacturing and distilling facilities are located in Yerevan, while other factories operate in the provinces.

Although brandy production is industrial, its supply chain depends heavily on grape growers across several Armenian provinces. Restrictions on brandy exports can therefore reduce rural incomes, grape procurement prices, agricultural investment, and employment across the wine and spirits value chain.

Multiplier effects could also emerge. Declining exports could reduce demand for transportation, packaging, cold storage, logistics, wholesale trade, and agricultural inputs. As farmers experience shrinking revenues, local spending in rural communities could decline, affecting retailers, service providers, and other nonagricultural businesses. In sectors where affected products are highly perishable, exporters may face substantial losses because goods cannot be stored for long while they search for alternative markets.

Table 1. Exports of Affected HS Chapters (U.S. dollars)

Source: UN Comtrade online database; authors' calculations.

Government Response

Between June 4 and 18, 2026, the Government of Armenia approved several export-support programs, including direct export subsidies, compensation of customs duties for exports to alternative markets, and financial relief measures for greenhouse businesses. These measures were designed to strengthen the resilience of Armenian exporters, support rural livelihoods, and encourage export diversification.

The government response focused on four priorities: (1) direct export subsidies for affected products exported to alternative markets; (2) support for fruit, wine, brandy and mineral-water exporters seeking alternative markets; (3) compensation of customs duties to facilitate diversification toward the EU, UK and Canadian markets; and (4) financial relief for greenhouse producers through loan restructuring and additional grace periods, based on government monitoring of eligible greenhouse operations by July 1, 2026.

Response from the EU

The European Union responded rapidly to the Russian import restrictions imposed on Armenian products in May and June 2026. On June 4, 2026, Ursula von der Leyen, president of the European Commission, announced an emergency support package of more than 50 million euros and pledged EU assistance to affected Armenian exporters. In addition to financial support, the EU said it would facilitate access to the EU market for Armenian agricultural and food products, while supporting export diversification efforts by businesses and the government, including through business-to-business cooperation.

On June 19, 2026, the European Commission disbursed the first tranche of 34 million euros to help Armenia's private sector cope with the economic effects of Russia's trade restrictions.

Economic Growth Perspectives

The most crucial factor shaping the transition period and the broader transformation of the economy will not be only the availability of financial support. It will also be the speed of regulatory compliance with the EU acquis.

Short-run outlook: In the short run, Russian import restrictions would negatively affect economic growth because Armenia's high dependence on the Russian market is expected to lead to declining sales for exporters, lower producer prices, cash-flow shortages, and increased post-harvest losses. The impact on rural communities, small and medium-sized farms, greenhouse operators, fisheries, wineries, and food-processing enterprises will vary depending on whether they can find alternative markets and comply with EU regulations. These pressures could reduce household incomes and investment and may materially slow GDP growth. Under a severe scenario, a slight contraction could occur.

Medium-term outlook: GDP growth would depend largely on the speed and effectiveness of the transition toward compliance with the EU acquis, particularly in sanitary and phytosanitary measures, food safety requirements, traceability systems, certification, and technical regulations. If the Government of Armenia, with assistance from the European Union and other donor organizations such as the World Bank and the United Nations, successfully implements modernization measures and provides targeted financial and technical assistance to farmers, exporters, and producers, while also strengthening institutional capacity to govern the transition, exporters could gradually gain access to the EU and other Western markets. The transition would require substantial investment to improve competitiveness in the export sector. The availability of funding, together with carefully designed and timely implemented programs, would determine the pace of GDP growth.

Long-run outlook: Compliance with the EU acquis could drive Armenia's economic growth by improving the competitiveness of Armenian businesses and allowing them to enter other markets more aggressively, including Gulf markets and developed-country markets. Productivity gains from improved product quality, innovation, and targeted investment, along with potential integration into the value chains of established brands, could support higher growth in value-added exports. GDP growth could accelerate if backed by a more resilient and diversified economy.

Conclusion

The Russian import restrictions imposed in 2026 exposed Armenia's vulnerability to external shocks stemming from its dependence on a single export market. In the case of agricultural and food-related products, dependence on Russia could severely affect rural livelihoods and deepen regional disparities in the short run.

The direct economic consequences could be significant, urging both the government and local businesses and farmers to accelerate the transition toward compliance with the EU acquis. Timely government modernization policies, strong commitment from businesses and farmers to align with higher standards, and the availability of financial and technical assistance from the European Union and other donor organizations will determine how quickly Armenian GDP can grow over the medium and long term.

Source Note

Trade figures are based on UN Comtrade data and authors' calculations. The chronology and policy-response sections were cross-checked against public reporting and official statements, including Reuters reporting dated June 2, 2026; European Commission statements dated June 4 and June 19, 2026; Armenpress reporting dated June 2 and June 18, 2026; ARKA reporting dated June 4, 2026; JAMnews reporting dated June 13, 2026; and The Moscow Times summaries dated June 3 and June 11, 2026.

Authors: Anna Makaryan, Ph.D., Nexus Intellect Research NGO, and M. Kotanyan Institute of Economics of the National Academy of Sciences of the Republic of Armenia, ORCID: 0000-0003-0505-7869.

Verej Isanians, Ph.D., Nexus Intellect Research NGO, Dean of the School of Management at European University of Armenia, ORCID: 0009-0008-1145-9251.