OBSERVATION 1: 7.6% Economic Activity Growth — the numbers say one thing, the structure another

In January 2026, Armenia’s economic activity indicator amounted to +7.6%. In numerical terms, this can be presented as relatively high growth. However, a comparison of macroeconomic data shows that the structure of the economy continues to remain vulnerable and contradictory.

On the one hand, industry grew by +10.6%, construction by +18.7%, and services by +7.4%. On the other hand, foreign trade turnover decreased by –12.0%, including exports –13.5% and imports –11.2%.

In January 2026, industrial output increased by 10.6%. At first glance, this may create an impression of industrial recovery.

However, a structural analysis of industry shows that this growth still does not imply a deep transformation of the production system.

In January, the total volume of industrial output amounted to about 229.5 billion drams. The structure of this volume is as follows: manufacturing industry - 56.5%, mining industry - 22.5%, electricity, gas and steam supply - 19.9%.

This structure shows that the share of raw material and energy sectors in industrial growth remains large, while the share of high value-added technological production remains limited.

The raw materials sector continues to remain the main driver of industry

The mining industry grew by 25.2%, and metal ore extraction by 28.4%. This means that a significant part of industrial growth once again comes from the raw materials sector.

When industrial growth is driven by mining, the economy continues to depend on fluctuations in raw material markets and changes in international prices.

Growth within manufacturing is highly uneven

Manufacturing as a whole grew by 4.3%. However, the picture across subsectors is highly different.

Growth was recorded in: chemical production — 3.2 times, production of computers, electronic and optical equipment — 2.9 times, electrical equipment production — 56.4%, pharmaceutical production — 44.1%, furniture production — 75.9%.

At the same time, declines were recorded in: non-metallic mineral products — –24.4%, paper production — –15.6%, rubber and plastic products — –13.2%, tobacco production - –3.5%.

This means that industrial growth is not uniform; it is formed by a few rapidly growing directions, while a number of traditional manufacturing sectors continue to weaken.

The energy structure is also vulnerable

In January, electricity production increased by 18.1% and amounted to about 1,085.7 million kWh. However, the main source of this growth was thermal power plants, whose production increased by 77.2%.

At the same time, hydropower production decreased to 48.7% of the previous year’s January level, while nuclear production remained almost unchanged.

This means that the energy base of industrial activity at the moment is more dependent on thermal generation, that is, more costly and dependent on energy resources.

Conclusion

The 10.6% growth of industry in January 2026 is positive in numerical terms, but its structure still does not indicate a deep transformation of the industrial system.

Growth is formed by high rates in the raw materials sector, uneven movement within manufacturing, and a heavier energy structure.

In these conditions, industrial growth can be viewed as numerical activation, but not yet as a result of sustainable industrial transformation.

The main question remains the same: can the economy develop in the long term if the basis of industrial growth continues to be dominated by raw material production and a heavy energy structure, rather than technological transformation?