WB expert on lack of economic diversification in terms of trade  partners and export products of Armenia 

ArmInfo. Lea Hakim, Senior Economist in the World Bank's Global Macro and Debt Analytics team  and Program Manager of the Debt Management Facility, posted the following message on her LinkedIn account: 

How can Armenia achieve its development goals and promote inclusive  and sustainable growth?

This week we launched "Beyond Boundaries: Unlocking Potential for a  Sustainable Tomorrow." In this Systematic Country Diagnostic for  Armenia, we find that since 2017:

1. Armenia is facing greater vulnerability from shocks (fragility and  conflict, climate change and natural hazards, and economic shocks due  to lack of diversification); 

2. While growth has been high in some periods, the economy is  vulnerable to exogenous shocks and has not been generating enough  jobs; 

3. Jobs are the main driver of poverty reduction, and have become  increasingly so.

We thus identify 11 priorities Armenia needs to focus on to  accelerate progress towards inclusive and sustainable growth.  Priority interventions relate to:

1. Strengthening resilience to shocks from fragility and conflict,  economic causes, and climate change and natural disasters;

2. Spurring the economy and private sector to be more competitive and  productive to generate more and better quality jobs;

3. Advancing of human capital accumulation, focusing on improving the  quality and relevance of education and access and affordability of  healthcare to enhance people's human capital and readiness to  capitalize on job opportunities.

According to the report entitled "Beyond Boundaries: Unlocking  Potential for a Sustainable Tomorrow," co-authored by Ms Hakim,  "Armenia is only exporting a small share of its potential and stands  to gain from increased trade from full effective implementation of  the WTO Trade Facilitation Agreement. Currently, Armenia's  integration in global value chains is limited to some participation  in light manufacturing. While Armenia has scored large improvements  in logistics service quality, tracking and tracing, and customs, poor  infrastructure within the country constrains access to goods,  services, and labor markets. This contributes to spatial disparities  and hinders basic public service delivery, inputs for productive  activities among firms, and the household accumulation of human  capital. Although digital connectivity is high overall, digital  adoption in rural areas is constrained by affordability, service  quality, access to digital devices, and lack of digital skills and  awareness.

"Despite growth averaging 6.2 percent over 2000-22, this period was  punctuated by two large slowdowns in growth in 2009 and 2016, largely  due to Armenia's economic structure, its exposure to commodity price  fluctuations, and its limited number of trading partners. More than  two-thirds of Armenia's exports are to Russia, the European Union,  China, and Switzerland. Primary products from mining-namely copper,  molybdenum, and gold-have grown to about 30 percent of exports, both  limiting the complexity of Armenia's exports and exposing Armenia to  commodity price shocks. Armenia's imports are also heavily  concentrated. For example, energy supply from gas relies exclusively  on imports from Russia, and the high dependence on basic food items  poses a risk to food security." 

According to the Statistics Committee of Armenia, Russia continues to  hold the leadership in foreign trade turnover in general, and in  exports and imports in particular. In particular, the foreign trade  turnover between Russia and Armenia at the end of 2023 exceeded $7.3  billion, with annual growth slowing from 91.7% to 43.3%. Exports of  goods from Armenia to Russia significantly slowed down annual growth  from 2.9 times to 38.8% to $3.4 billion, with a slight acceleration  in the increasing rate of imports of goods from Russia to Armenia  from 46.9% to 47.4%, ensuring volumes of level of $3.9 billion.  Russia's share in Armenia's foreign trade turnover decreased slightly  year-on-year - from 35.9% to 35.3%. 

The full report "Beyond Boundaries: Unlocking Potential for a  Sustainable Tomorrow" is available here:   https://documents1.worldbank.org/curated/en/099518004292423713/pdf/IDU17c11ce211 8c6e149001b5b818ce6ca203b19.pdf