ArmInfo. Chronic underfulfillment of capital expenditures, fraught with a decrease in economic potential, continues. This is the conclusion reached by experts of the LUYS Foundation after analyzing the socio-economic development of the Armenian economy in the first half of the year.
In particular, according to the analysis, compared to the low growth at the beginning of the year, starting from May 2025, the growth rate of economic activity has accelerated, mainly due to the base effect.
Although the indicator slowed down somewhat in June compared to May, the cumulative index of economic activity for January-June continued to accelerate, reaching 6.3% compared to 5.7% in January- May. The acceleration in growth rates is mainly due to the softening of the decline in industry.
At the same time, economists noted that export indicators remain at a fairly low level. The rate of decline in exports has softened somewhat, but remains at a fairly deep level. In 2025, the cumulative decline for January-June was 52.8%. Such a significant decline is mainly due to the neutralization of gold re-export volumes. However, even taking into account the adjustment of export indicators in this regard, the growth will be only 1.1%, which is quite low and indicates a loss of export potential in recent years.
The execution of the state budget has deviated significantly from the plan. Although the actual budget revenue indicators are overfulfilled compared to the plan, expenditures are significantly underfulfilled (by 240.2 billion drams, or 14.0%). As expected, a significant part of the underfulfillment (about 101.7 billion drams) falls on capital expenditures.
"The government is deviating from the previously planned policy, which, naturally, can have significant negative economic consequences. Underfulfillment of capital expenditures (about 25.6%) can have a significant negative impact on the modernization of critical infrastructure of the economy, slowing down economic development and long-term growth potential. It is known that the problem of underfulfillment of capital expenditures is chronic, but no visible steps are being taken to solve it, "- summed up the experts of the Luys Foundation.
According to the law "On the state budget for 2025", according to the draft, budget expenditures in 2025 will amount to 3.4 trillion drams, of which current expenditures - 2.7 trillion drams, and capital expenditures - 734 billion drams.
According to the Medium-Term Expenditure Framework for 2026-2028, the share of capital expenditure in GDP will stabilize at an average level of 5.9% of GDP until 2028, while current expenditure will gradually decline from 24.3% in 2026 to 22.7% of GDP in 2028.
