Armenia Country Profile

Snapshot of the Armenia Country Profile


Armenia is a transitional economy, with construction and services as the two main engines of its economic growth. Armenia's annual GDP has grown by an average of 12% for the past several years, providing an attractive market for foreign investors despite a 10% inflation rate and a growing trade deficit. In recent years, Armenia has been implementing an ambitious programme of reforms, improving tax and customs regulations, restructuring the banking sector, and liberalising its economy. However, widespread and systemic corruption in government bureaucracy coupled with inconsistent implementation of laws, weaken the state institutions and restrict their efficiency.

Positive developments in relation to corruption and investment:

  • Armenia's anti-corruption strategy has led to the exposure of a number of high-ranking officials, who have been dismissed on charges of bribery and corruption.
  • Foreign investors in Armenia are given several investment incentives, such as tax holidays and the ability to carry forward losses indefinitely.
  • Armenia has initiated a process of enhancing transparency and accountability in governance. In order to reduce bureaucracy and decrease the opportunities for corruption, 'one-stop shops' have been established for enterprises to deal with public officials, and several governmental internet portals have been launched to make the regulatory processes more transparent.

Risks of corruption:

  • SMEs encounter two types of corruption in Armenia; high level corruption through the abuse of political authority and administrative corruption exercised through middle- and lower-level public officials.
  • The selective and non-transparent application of tax, customs and regulatory rules, as well as the weak enforcement of court decisions increase the opportunities for corruption.
  • To meet international standards of good governance, Armenia needs to combat corruption and nepotism, limit the influence of the executive over the judiciary, pass uniformly applicable legislation on licences, taxes and customs, and strengthen the banking sector.