Armenia could lose about 23 percent of its GDP if it joins the European Union (EU), said deputy secretary of the Russian Security Council, Aleksey Shevtsov.

“According to the most modest and conservative estimates, joining the EU will cost Armenia about 23 percent of its GDP. The massive reduction in the labor market and the growth in inflation rates will lead to a significant decline in living standards. Domestic consumption will decrease by more than 20 percent, and a sharp increase in energy prices is also expected,” Shevtsov said, RIA Novosti reports.

He stressed that membership in the Eurasian Economic Union (EAEU) is incompatible with the Association Agreement with the EU, Armenia cannot be in both organizations at the same time, so it will have to leave the EAEU first.

“Exiting the EAEU will, first of all, mean the return of export restrictions, the cancellation of single requirements for goods and services, the restoration of full customs control. In addition, the preferential regime for Armenia’s migrants will be abolished, and standard tariffs will begin to operate for cargo transportation,” Shevtsov noted.

In this scenario, according to him, Armenia’s farmers will have to look for new sales markets, since due to customs duties, Armenian products will lose their competitiveness. Also, freight transportation costs will increase, investments will be reduced, and preferential supplies of energy carriers will be stopped.

As per Shevtsov, exiting the EAEU will lead to a serious economic downturn for Armenia.

“According to the most conservative estimates, GDP will decrease by 15.1 percent, domestic consumption by 14.1 percent, and industrial production by 26.3 percent,” the deputy secretary of the Russian Security Council noted.

Metallurgy, the production of beverages, tobacco, and food will be the main hit, inflation will increase by 14.3 percentage points, and unemployment by 6.4 in Armenia.

“At the same time, other countries will not suffer significant negative consequences. Their losses will amount to hundredths of a percent,” Shevtsov added.

According to him, in case of accession to the EU, Armenia will also have to bring its legislation and economy into line with the Union’s standards.

“Products will face market quotas and the need to comply with technical regulations, which in turn will require additional investments. The introduction of the European customs control system will actually end the free transit of goods,” the deputy secretary of the Russian Security Council said.

As a result, according to Shevtsov, Armenia’s GDP could decrease by another 7.7 percent, domestic consumption by 7.48 percent, inflation by 8.3 percentage points, and unemployment by 4.1 percent.