Economy of Armenia
Armenia is the second most densely populated of the former Soviet republics because of its small size. It is situated between the Black Sea and the Caspian Sea, bordered on the north and east by Georgia and Azerbaijan and on the south and west by Iran and Turkey.
Until independence, Armenia's economy was based largely on industry—chemicals, electronic products, machinery, processed food, synthetic rubber and textiles; it was highly dependent on outside resources. Agriculture accounted for only 20% of net material product and 10% of employment before the breakup of the Soviet Union in 1991. Armenian mines produce copper, zinc, gold and lead. The vast majority of energy is produced with imported fuel, including gas and nuclear fuel from Russia (for its one nuclear power plant.) The main domestic energy source is hydroelectric. Small amounts of coal, gas and petroleum have not yet been developed.
Continued progress will depend on the ability of the government to strengthen its macroeconomic management, including increasing revenue collection, improving the investment climate, and accelerating privatization. Armenia's severe trade imbalance has been offset somewhat by international aid, remittances from Armenians working abroad, and foreign direct investment. Economic ties with Russia remain close, especially in the energy sector. The government made some improvements in tax and customs administration in 2005, but anti-corruption measures have been more difficult to implement. Investment in the construction and industrial sectors is expected to continue in 2006 and will help to ensure annual average real GDP growth of about 13.9%.SectorsSecondary sector
Armenia experienced a construction boom during the latter part of the 2000s. According to the National Statistical Service, Armenia's booming construction sector generated about 20 percent of Armenia's GDP during the first eight months of 2007. According to a World Bank official, 30 percent of Armenia's economy in 2009 came from the construction sector.Retail trade
In 2010, retail trade turnover was largely unaltered compared to 2009. The existing monopolies throughout the retail sector have made the sector non-responsive to the crisis and resulted in near zero growth. The aftermath of the crisis has started to shift the structure in the retail sector in favor of food products.Services sector
In the 2000s, along with the construction sector, the services sector was the driving force behind Armenia's recent high economic growth rate. In 2010, the volume of services increased as much as 7.4 percent from January to September, over the same period in 2009.Tourism
According to official data, in 2007, a record-high 500,000 tourists visited Armenia — most of them ethnic Armenians from Europe, Russia and the United States. 2010 saw a noticeable increase in the number of Iranian tourists visiting Armenia - estimated to be 80,000.Industrial sector
Industrial output was relatively positive throughout 2010, with year-on-year average growth of 10.9 percent in the period January to September 2010, due largely to the mining sector where higher global demand for commodities led to higher prices. According to the National Statistical Service, during the January-August 2007 period, Armenia's industrial sector was the single largest contributor to the country's GDP, but remained largely stagnant with industrial output increasing only by 1.7 percent per year.Mining
40 percent of Armenia's exports in 2009 were mining exports.Agricultural sector
As of 2010, the agricultural production comprises on average 25 percent of Armenia's GDP. In 2006, the agricultural sector accounted for about 20 percent of Armenia's GDP.
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