Armenia's economic recovery will be stronger than expected in 2021, the World Bank said Tuesday, October 5, raising the country's GDP growth projection from 3.4% predicted in April to 6.1%.

Due to the twin shocks of the pandemic and the conflict with Azerbaijan, Armenia’s economy contracted sharply in 2020, which inflicted a significant welfare loss. The economic recovery in 2021 has been faster than anticipated, and the economy is likely to return to pre-Covid output levels by mid-2022. The slow pace of vaccinations, rising COVID-19 cases, and geopolitical fragility present important risks to the outlook.

The latest edition of the World Bank’s Economic Update for the region says the rebound in Armenia was supported by a robust pick-up in domestic demand, as well as strong export performance amid firming external demand for oil and metals. Although international tourist arrivals to the South Caucasus have improved somewhat from the troughs experienced in 2020, they remain about 75 and 60 percent below pre-pandemic levels in Georgia and Armenia, respectively.

Armenia's economic rebound will outpace its neighbor Azerbaijan (5.0%), but will be less pronounced than in Georgia, which is on track to post the strongest growth of 8.0% this year.

In 2022 and 2023, Armenia's GDP is expected to expand by 4.8% and 5.4%, respectively.