The IMF’s latest World Economic Outlook highlights Armenia's impressive economic growth in 2022 and the first half of 2023. Armenia experienced remarkable economic expansion, becoming the fastest-growing country in Eastern Europe and Central Asia in 2022, with a growth rate of 12.6%. This growth was attributed to various factors, including an influx of migrants, businesses, and increased capital following Russia's invasion of Ukraine. The positive momentum continued into the first half of 2023, with a double-digit GDP growth rate of 10.5% year-on-year in real terms. The services sector, especially in areas like IT, trade, and transportation, played a significant role in driving this growth.

Armenia's budget in the first half of 2023 showed a surplus of 1.4% of the projected GDP, surpassing the initially planned deficit of 1%. This positive fiscal performance was primarily attributed to a 6% overperformance in tax revenue collection. As a result of this surplus, Armenia's government debt-to-GDP ratio continued to decline and was estimated to be around 44% of the projected annual GDP by the end of July 2023.

The economic outlook for Armenia anticipates a growth rate of 6.6% in 2023, showing a slight easing compared to the impressive growth experienced in 2022. Looking further into the medium term, growth is projected to continue moderating, with an average rate of 4.3% expected in 2024-2025. The country's average inflation rate is forecasted to be close to the target of 4% in the medium term.

Regarding the fiscal situation, the budget deficit is expected to reach 2.4% of GDP in 2023, which is lower than initially budgeted, primarily due to tax revenue overperformance. The current account deficit is anticipated to widen in 2023, driven by increased imports of goods, a slowdown in exports compared to the high base of 2022, and a deterioration in income accounts. Foreign direct investment inflows are expected to largely finance this current account deficit.

One notable effect of the strong economic growth experienced in 2022-2023 is a projected decrease in poverty. The poverty rate is expected to drop from 51.7% in 2021 to 37.6% in 2023.

It is important to note that the economic outlook for Armenia is already subject to some potential risks and uncertainties. These projections do not yet account for the impacts related to the ongoing Nagorno-Karabakh crisis.

Recent events, including the influx of 100,000 ethnic Armenians, a humanitarian crisis, border tensions, potential disruptions in money transfers, and economic slowdowns in trading partner nations, present substantial economic risks.