Future Armenia : Connect, Compete, Prosper
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 sustaine...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/716961524493794871/Future-Armenia-connect-compete-prosper http://hdl.handle.net/10986/29791 |
| Summary: | 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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