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Future Armenia : connect, compete, prosper (English)

Since its independence in 1991 and until prior to the global financial crisis (GFC) in 2008-09, Armenia was considered an important success story among the transition economies. Indeed, over several years, the country displayed a record of sustained macroeconomic achievements, reflected in high growth, economic stability, low inflation, and modest deficits and external debt, as well as falling poverty rates and shrinking income disparities. This Systematic Country Diagnostic (SCD) identifies four challenges for Armenia to reinvigorate inclusive growth and resilience. First, with far less supportive external circumstances, reigniting economic growth calls for asearch for new drivers and the rebalancing of growth toward the tradable sectors. Against this backdrop, the country’s low export performance and limited global multi-connectivity caused by high trade and transport facilitation costs are the first challenges to be addressed. Second, insufficient private sector productivity stands in the way of both higher growth and job creation. Firms, as the productive engines of the economy, appear constrained in their ability to lift productivity reforms, limited competition, and the need to deepen further financial development. Third, poverty reduction and shared prosperity, that is, the transmission of aggregate growth to individual wellbeing and poverty reduction, also seems constrained by labor market challenges: labor resources are shrinking, labor-force participation is low, and the country has one of the lowest employment and highest unemployment rates in the Europe and Central Asia (ECA) region, whileworkers’ productivity has fallen. Learning outcomes seem to lag demand, both in terms of the level and type of skills that are sought by the market. Declining labor resources are compounded by low women participation in the labor market. Fourth, key vulnerabilities at the macroeconomic, environmental, and microeconomic levels are faced by Armenia in its quest for poverty reduction and shared prosperity. Armenia’s aging population will have a significant impact on health spending and on the pension system, and could, if not addressed, have major implications in terms of fiscal sustainability and poverty.


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    Systematic Country Diagnostic

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  • Region

    Europe and Central Asia,

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  • Doc Name

    Future Armenia : connect, compete, prosper

  • Keywords

    small and medium size enterprise; information and communication technology; world development indicator; inclusive growth; current account deficit; high rates of investment; weaknesses in tax administration; per capita growth rate; European Bank for Reconstruction; flexible exchange rate regime; flexible exchange rate policy; Growth and Shared Prosperity; economic and social performance; enforcement of property right; fiscal rule; gdp growth rate; Poverty and Equity; construction sector; current account balance; access to finance; trade and competitiveness; remittance; domestic demand; external environment; consumption growth; fiscal deficit; private sector worker; inclusive economic growth; export of goods; real exchange rate; tradeable good; Real estate; investment climate; trade and investment; gross capital formation; high growth rate; net indirect tax; barriers to employment; effective exchange rate; competition policy framework; channels of transmission; macroeconomic and fiscal; human capital accumulation; Logistics Performance Index; employment in agriculture; transparent procurement process; elasticity of export; Exchange rate policies; composition of revenue; international trade regime; labor market participation; corporate governance reform; private sector productivity; demand for skill; gender wage gap; company income tax; poverty headcount rate; impact of climate; demand for import; national poverty rate; international poverty comparison; international poverty line; social protection spending; flow of resource; high poverty rate; impact on poverty; personal income tax; global financial crisis; disaster risk management; senior operations; reallocation of resource; Public Financial Management; engine of growth; Exchange Rates; impact on health; corporate income tax; domestic reform; macroeconomic performance; external condition; real gdp; Job Creation; dutch disease; armenian dram; capital spending; public debt; Fiscal policies; real appreciation; fiscal policy; tax revenue; banking sector; aging population; export opportunity; customs administration; financial deepening; income disparity; fiscal regime; market price; public expenditure; commodity export; export opportunities; demographic trend; export flow; labor resource; Business Climate; export base; domestic investment; financial flow; external shock; productivity growth; pension reform; Energy Sector; Macroeconomic Stability; Macroeconomic Policy; metal price; comparator country; productive infrastructure; Product Diversification; government spending; tax relief; tax policy; outreach activity; sound board; research group; development partner; bankruptcy legislation; productive investment; high spending; medium-term planning; domestic revenue; tax system; import demand; fiscal risk; economic sector; contribution system; fiscal activity; fiscal management; russian ruble; social spending; targeting efficiency; expansionary policy; market income; budgetary allocation; real wage; government expenditure; fiscal adjustment; economic shock; short-term adjustment; fiscal stance; social need; aggregate demand; price stability; tax productivity; contingency planning; medium-term revenue; business condition; trade integration; economic competition; reform policy; long-term growth; fiscal retrenchment; public revenue; implementing policy; Tax Compliance; Export Diversification; Financial Stability; Centralized Procurement; construction spending; Fiscal Sustainability; spatial development; aggregate growth; export volume; foreign inflow; domestic service; commodity boom; Capital Investments; national currency; financial inclusion; bank deposit; macroeconomic development; residential housing; poverty reducing; economic model; export value; reform priorities; nominal wage; employment growth; legal framework; firm level; teaching quality; Early childhood; school readiness; development system; target health; job cut; survival prospect; Water Management; health implications



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Future Armenia : connect, compete, prosper (English). Washington, D.C. : World Bank Group.