Economic growth in Armenia has slowed due to weakening demand, according to the Asian Development Bank’s (ADB) forecast for the country.

Armenia’s economic growth forecasts for 2026 and 2027 remain unchanged at 5.0% and 5.5%, respectively. They are based on indicators of domestic demand, construction, services sector, and tourism.

Against the background of persistent obstacles to trade processes, Armenia’s deficit has amounted to 12.6% of GDP.

Despite the weakening demand, economic growth in the country remained stable and reached 6.0% in the first half of 2026—compared to 5.9% in the same period last year.

The growth rate of the construction sector of  Armenia slowed down slightly, reaching 20.2% from 20.7% last year, but the high activeness in the sector was maintained due to infrastructure investments and ongoing housing construction programs.

The growth rate of the services sector in the country slowed down from 7.0% last year to 6.0%. This is due to the fact that the slowdown in the growth rates of the wholesale and retail trade, information and communication, financial and insurance, as well as professional services sectors had a greater impact than the growth recorded in the transport and storage economy, tourism-related activities, as well as administrative and support services sectors.

The agriculture sector of Armenia recorded a decline of 11.0%—after a growth of 5.9% the previous year.

Overall investment growth in the country slowed sharply in the first half of 2026, to 0.4% from 25.2% a year earlier, as growth in fixed capital formation was largely offset by a more than 50% decline in inventories.

Russian import restrictions on Armenia and disruptions to regional trade due to the Middle East conflict will dampen growth. However, domestic demand, expansion in the construction and services sectors, growth in tourism, and continued fixed capital investment should support growth over the forecast period. Growth forecasts for 2026 and 2027 are therefore unchanged.

Inflation in Armenia accelerated in the first seven months of 2026, reflecting rising global food and commodity prices, as well as disruptions to regional trade routes. In January-July 2026, average inflation increased from 3.2% the previous year to 4.5%, driven by a 7.5% increase in food prices.

Prices for services increased by 2.6%, and prices for other goods by 1.6%. In July 2026, annual inflation was 4.5%, exceeding the Central Bank of Armenia’s target range of 2-4%.