Expert warns: Armenia faces major capital outflows, declining foreign investments

By the end of 2023, Armenia's net inflow of foreign direct investments decreased by 2.3 times compared to the previous year, amounting to $443 million, according to expert Vahe Davtyan.

Speaking to Armenian media, Davtyan highlighted that one of the most obvious trends was the outflow of equity capital from Armenia, which led to a reduction in net financial liabilities on equity capital by $335 million, per Caliber.Az.

"This process had a negative impact on reinvested capital, which decreased by more than $200 million," he explained.

The expert also pointed out that while investments from the UAE are significant, the largest ongoing deal remains the agreement between Masdar Company and the State Interest Fund of Armenia, which was liquidated due to financial irregularities. This deal, focused on constructing a $300 million solar power plant, has seen its realization date delayed year after year.

"In general, major international projects continue to bypass Armenia, and the state policy in this sphere remains fragmented and inconsistent, which is greatly facilitated by the lack of a clear foreign policy line," Davtyan added.

In a related economic context, economist Aghasi Tavadyan also commented on Armenia’s economic performance. He noted that while Armenia’s export growth surged by 50% in 2024, the growth has proven unsustainable, with export figures declining sharply in recent months. Tavadyan pointed out that Armenia’s foreign trade turnover in January 2025 had fallen by 40% compared to the same period in the previous year.

Tavadyan explained that while the export growth in 2024 seemed strong, it was primarily driven by gold re-exports, which accounted for about 65% of the country’s total exports. "This heavy reliance on gold re-exports has created a misleading picture of Armenia’s economic strength," he said.

In addition, Armenia’s exports to the Eurasian Economic Union (EAEU) declined by 11% in 2024, while exports to the European Union dropped by 14%. Instead, a significant portion of Armenia’s foreign trade was linked to gold imports, with the country importing $1.5 billion worth of gold in March 2024 alone. By the end of the year, however, this volume had decreased by more than five times, contributing to an overall decline in foreign trade figures.

By Tamilla Hasanova