Due to a downturn in the agricultural and industrial sectors, Armenia's central bank has lowered its economic growth prediction for 2021 from 5.4% to 4.2%.

Armenia's economy grew by 2.7% in the third quarter of this year, owing to rising commodity prices on global markets, agricultural expansion, and strong tax revenues. Industrial output increased by 1.1% year on year to almost 3.4 billion euros, construction output increased by 5.9% to 549 million euros, and services (excluding commerce) increased by 6.4% to over 2.6 billion euros.

"However, the positive impact of demand endures," Martin Galstyan, the central bank governor, told reporters. "This is now backed by the impact of foreign demand owing to higher-than-expected tourism growth."

The country’s economic activity grew by 4.3% in the first 10 months of 2021 compared to the same period last year, supported by the growth in almost all sectors of the economy.

The economic activity index in October 2021 was up 3.6% year-on-year, but 4.9% down compared to September this year. Growth was recorded in all sectors, except electricity consumption.

Despite recent significant development, Armenia's economy has been hit by twin hurdles, COVID-19 pandemic restrictions and last year's six-week renewal of the fighting between Azerbaijanian and Armenian troops over the Nagorno-Karabakh territory and neighbouring regions.

The ex-Soviet country's economy grew in the second quarter of this year, aided by rising commodity prices on global markets, agricultural expansion, and strong tax collection numbers. In April-June, GDP increased by 13.1% year over year and 17.4% when compared to the first quarter of this year. As a result, the government revised its economic growth prediction to almost double what it had previously expected — to 6% from 3.2%.

The World Bank projects Armenia’s growth at 6.1% in 2021 and 4.8% next year. The International Monetary Fund (IMF) said in its latest World Economic Outlook report in October that it expected Armenia’s economy to grow 6.5% in 2021 and 4.5% in 2022.

Armenia's long-term foreign-currency issuer default rating (IDR) was confirmed at 'B+' by Fitch Ratings in May, with a stable outlook. Armenia's economy will rebound somewhat this year and next, according to Fitch Ratings, as the nation recovers from the COVID-19 epidemic and a flash conflict with Azerbaijan.

The rating agency predicted that GDP would grow by 3.2% in 2021 and 4.0% in 2022, saying that while economic activity was improving, some industries, such as banking, remained damaged by the recent slump.

Armenia also possessed a strong macroeconomic and fiscal policy framework, as well as a credible commitment to change, according to Fitch, all of which were backed up by the IMF standby agreement.

S&P Global Ratings assigned its ‘B+’ long-term foreign- and local-currency sovereign credit ratings to Armenia and ‘B’ short-term foreign- and local currency ratings. The outlook is positive. The agency has also assigned its ‘BB-’ transfer and convertibility assessment to Armenia.

S&P said that the Armenian economy was recovering and that it expected the country’s GDP to exceed 2019 levels by next year and for growth to settle at close to 4% a year over the medium term.