Armenia’s heavy reliance on consumer spending is driving inflation and poverty rather than sustainable growth, economist Mikayel Melkumyan warned at a policy forum in Yerevan.
Speaking at a debate hosted by the “New Project: Economic Wave” initiative on Saturday, Melkumyan, a professor of economics, said more than 90% of Armenia’s GDP is tied to consumption. “An economy built almost entirely on consumption cannot deliver development,” he said. “This model inevitably fuels inflation and poverty, no matter how much wages or pensions are raised.”
Melkumyan unveiled a 10-point plan aimed at rebalancing the economy toward investment and production. The proposals include creation of 10 tax-free industrial zones across Armenia’s regions, raising the minimum wage from 75,000 drams to 120,000 drams within two years, launching a streamlined “one-stop” program to attract investors, indexing pensions and salaries ahead of inflation, cutting turnover tax for small and medium enterprises to 1%, reducing gas and electricity tariffs by 10%, halving property tax rates, granting loan amnesty on penalties for debts up to 3 million drams, building cold storage, packaging, and warehousing facilities in every region and making higher education free of charge.
He stressed the need for industrial development outside the capital. “We need to study the state of enterprises in the regions, take stock and give businesses the tools to operate with industrial mortgages. It is time to move activity out of Yerevan and build up the regions,” Melkumyan said.
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