The 'Luys' Foundation has analyzed the socio-economic developments of Armenia's economy in January-July 2026. Economic activity growth has remained at a high level, but in recent months there has been a gradual slowdown and deepening of the structural imbalance of growth. The cumulative growth for January-July was 7.7%, with the main sources being services, industry, and construction. However, despite the high growth of services and construction, the growth of industry has slowed, and trade growth has remained almost zero.
The decline in exports, acceleration of imports, reduction of capital expenditures, and inflation levels above the target range also indicate that the high current growth has not yet fully transformed into a balanced and long-term sustainable growth. Therefore, it is important not only to maintain the growth rate but also to improve its structure and quality, especially by increasing the role of productive, investment, and export sectors.
The dynamics of exports and imports in foreign trade continue to move in opposite directions. In July, the annual decline in exports somewhat eased to 15.7%, but the cumulative decline for January-July deepened to 7.9%. At the same time, the growth of imports accelerated in July to 21.5%, with cumulative growth reaching 7.7%. This difference increases the pressure on the deterioration of the external trade balance.
Notably, there was a recorded 25.7% decline in the export of plant-based products, which may reflect the first effects of the restrictions imposed by Russia since June, although the specific impact of these restrictions cannot yet be accurately assessed, as the available detailed commodity data only covers the initial period of their implementation.
In the budgetary sector, high revenue growth continues, but the structure of expenditures remains concerning. In January-July 2026, current expenditures increased by 17.2%, while capital expenditures decreased by 26.6%. The decline in capital expenditures continues to be due to the issue of their underperformance, negatively affecting the potential development of the economy.
