The dynamics of foreign trade remains unstable. “LUYS” Foundation

“LUYS” Foundation analyzed the socio-economic developments of the RA economy in 2026. in January-May.

Thus.

• 2026 in May, the growth of economic activity accelerated significantly, reaching 11.7%, as a result of which the cumulative growth of January-May was 8.0%, but the structure of growth continues to contain stability risks. The main sources of growth were industry, services, as well as construction. Industry’s contribution was significantly driven by mining and sub-sectors containing re-export elements, whose future growth prospects are uncertain.
• The high growth in the construction sector was not only maintained, but also somewhat accelerated in May. In January-May, construction volumes increased by 24.1%, despite the high base of the previous year and the expectations arising from the gradual completion of the interest payment repayment program for mortgage loans in Yerevan. High construction growth, combined with continued credit expansion, supports domestic demand, but at the same time requires monitoring of future real estate market developments and potential risks.
• The dynamics of foreign trade continues to be unstable. In May, exports decreased by 11.5%, and the cumulative decline of January-May was 3.7%. The decrease in exports is mainly due to the decrease in exports of precious stones and metals, while the high growth of mineral products significantly mitigated the decline. Cumulative import growth slowed to 2.2%. These developments show that foreign trade indicators continue to be highly dependent on individual product groups and factors related to re-exports.
• In the fiscal sector, revenue growth accelerated, while expenditure growth slowed significantly. In January-May, state budget revenues increased by 14.7%, and expenses by 4.5%, resulting in a surplus of 95.8 billion drams. However, the cost structure remains a concern. Thus, current costs increased by 15.2%, while capital costs decreased by 46.8%. Therefore, the budget surplus to a significant extent is caused by the underperformance of capital expenditures and does not in itself indicate an improvement in the effectiveness of the spending policy. Moreover, the issue of the ability to implement capital expenditures, which is one of the key factors of economic development, still remains unresolved.

The full analysis is available at: by reference.

“LUYS” Foundation

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