Armenia had developed a modern industrial sector,
supplying machine tools, textiles, and other manufactured goods to sister republics
in exchange for raw materials and energy. Since the implosion of the
USSR in December 1991, Armenia has switched to small-scale agriculture away from
the large agroindustrial complexes of the Soviet era. The agricultural sector has
long-term needs for more investment and updated technology. The privatization of industry
has been at a slower pace, but has been given renewed emphasis by the current
administration. Armenia is a food importer, and its mineral deposits (copper, gold,
bauxite) are small. The ongoing conflict with Azerbaijan over the ethnic
Armenian-dominated region of Nagorno-Karabakh and the breakup of the centrally
directed economic system of the former Soviet Union contributed to a severe economic
decline in the early 1990s. By 1994, however, the Armenian Government had launched
an ambitious IMF-sponsored economic liberalization program that resulted in positive
growth rates in 1995-2003. Armenia joined the WTO in January 2003. Armenia also has
managed to slash inflation, stabilize the local currency (the dram), and privatize
most small- and medium-sized enterprises. The chronic energy shortages Armenia suffered
in the early and mid-1990s have been offset by the energy supplied by one of its
nuclear power plants at Metsamor. Armenia is now a net energy exporter, although
it does not have sufficient generating capacity to replace Metsamor, which is under
international pressure to close. The electricity distribution system was privatized
in 2002. Armenia's severe trade imbalance has been offset somewhat by international
aid and foreign direct investment. Economic ties with Russia remain close, especially
in the energy sector.
Gross Domestic Product (GDP) composition by sector:
agriculture 23.1%, industry 35.4%, services 41.5% (2002)
Labor force (by occupation): industry 25%,
agriculture 45%, services 30% (2002)
Unemployment rate: 20% (2001)
Industries: diamond-processing, metal-cutting machine
tools, forging-pressing machines, electric motors, tires, knitted wear,
hosiery, shoes, silk fabric, chemicals, trucks, instruments, microelectronics,
jewelry manufacturing, software development, food processing, brandy
Agriculture - products: fruit (especially grapes), vegetables; livestock
Exports - commodities: diamonds, mineral products, foodstuffs, energy
Exports - partners: Belgium 21.9%, Israel 16.4%,
Russia 14.7%, Iran 11.2%, US 8.4%, Germany 6.6% (2002)
Imports - commodities: natural gas, petroleum, tobacco
products, foodstuffs, diamonds
Imports - partners: US 14.1%, Russia 11.9%,
Belgium 11.3%, Israel 10%, Iran 9.5%, UAE 5.7%, Germany 5.1%, Italy 4.5%,
Ukraine 4.2% (2002)