As Armenia’s economic woes deepen, could Türkiye’s investments be game changer?

Armenia’s economy has faced significant challenges in recent years. In 2021, the country’s gross domestic product (GDP) was $13.9 billion, reflecting a growth rate of 5.7%. However, Armenia continues to contend with high unemployment and inflation:

• Unemployment rate: 18.2%
• Inflation rate: 7.7%

The economic structure is relatively balanced, with the service sector dominating at 53.16%. Agriculture and industry also play crucial roles in the economy. The ongoing conflicts with Azerbaijan over Karabakh have adversely impacted the service sector and financial system.

In response, international credit rating agency Fitch has downgraded Armenia’s credit rating, citing a harsher economic contraction than anticipated. The combined effects of these conflicts and the pandemic have stunted economic growth.

Steps toward economic recovery

Despite these challenges, Armenia is taking steps toward economic recovery:

• Normalization with Türkiye: Initiatives such as air cargo trade aim to strengthen economic ties.
• Government actions: Focus on economic reforms and infrastructure investments is a priority.

Ensuring long-term sustainable growth remains crucial, with an emphasis on structural reforms and regional stability.

Opportunities for Türkiye’s Investment

Recent developments have highlighted potential benefits for trade relations between Türkiye and Armenia. According to a post on the official X account of the Permanent Mission of Armenia to the Organization of the Black Sea Economic Cooperation (BSEC), Armenia’s diplomatic mission in Istanbul has encouraged Turkish companies to invest in the country.

Türkiye’s investment could offer several advantages:

Economic Growth, employment

• Agriculture and food processing: Türkiye’s advanced agricultural technologies could boost Armenia’s agriculture and food processing sectors.
• Tourism: Joint tourism projects and cultural events could enhance tourism revenues.
• Textiles and light industry: Türkiye’s textile expertise could improve Armenia’s production capacity and create new job opportunities.

Energy cooperation

• Renewable energy: Collaborations in hydroelectric and solar power could boost energy independence and regional energy security.
• Infrastructure projects: Joint projects could enhance energy efficiency for both nations.

Regional stability, cooperation

• Strategic location: Armenia’s position in the Caucasus could facilitate Türkiye’s access to other regional markets.
• Market access: Armenia’s Eurasian Economic Union membership could offer Türkiye easier market access.

Collaborative efforts in these sectors could drive significant economic growth and foster regional stability for both countries.