Armenia’s economy is projected to grow 5% in 2025, according to the Asian Development Bank’s (ADB) latest Asian Development Outlook. The forecast signals a continued deceleration, as the temporary uplift from regional shocks begins to unwind.

The ADB also anticipates further easing in 2026, with GDP growth forecast at 4.7%. By contrast, Armenia posted double-digit expansion in 2022 (12.6%) and strong momentum in 2023 (8.3%), while current estimates place 2024 growth at 5.9%.

The moderation reflects a shift away from the exceptional, and largely externally driven, gains of the past two years. Armenia saw a short-term boost in trade, migration, and financial inflows following Russia’s war in Ukraine and subsequent sanctions. But as those effects normalise, structural domestic factors are once again the primary growth drivers.

In the near term, private consumption and services are expected to carry the economy. Industrial and agricultural output, while steady, are projected to play a more modest role.

Inflation remains contained. The national statistics office reported an average inflation rate of just 0.3% in 2024, down sharply from earlier peaks. The ADB attributes this to a combination of falling global commodity prices and a shift in monetary policy by the Central Bank of Armenia (CBA), which has gradually lowered rates since mid-2023.

With inflationary pressure easing, the CBA’s focus has turned to supporting economic activity with its policy rate expected to remain on a downward trajectory, which could soften loan demand in the coming quarters.

Inflation is projected to rise slightly to 3% in 2025, in line with the CBA’s target range of 3% ±1 percentage point, consistent with the bank’s goal of maintaining macroeconomic stability.

While the fading of external tailwinds may trim headline growth, the forecast points to a more organic, demand-driven path forward. Armenia’s near-term outlook remains positive, but sustained momentum will depend increasingly on domestic fundamentals.