Armenia sees economic risks due to possible intensification of sanctions against Russia, Iran in 2025

YEREVAN. Jan 23 (Interfax) - Armenia is limited in utilizing its economic potential due to sanctions against Russia and Iran, as well as the risk of secondary sanctions, according to a report published by the Armenian Foreign Intelligence Service.

"An important economic challenge for Armenia is the existing sanctions against certain trading partners, particularly the Russian Federation and Iran, as a result of which our ability to fully utilize our economic potential is constrained by the risks of secondary sanctions," the service said.

"Under conditions of tightening secondary sanctions, Armenia's economy will face new restrictions," it said.

"According to our estimates, the lifting or easing of sanctions against Russia and Iran, which could potentially have a significant impact on Armenia's economy, is unlikely in 2025. Therefore, the risks associated with secondary sanctions will remain relevant for Armenia in 2025," it said.

"The combination of ongoing sanctions against Russia, the Russia-Ukraine conflict, and other significant factors increases the likelihood of an economic slowdown in Russia, creating additional risks for Armenia's economy as well," it said.

According to UN estimates, Armenia's GDP grew 6% in 2024, while the World Bank said growth was at 5.5%. The Armenian 2024 state budget projected GDP growth of 7%.

The Armenian authorities expect economic growth to slow to 5.1% in 2025. The World Bank forecasts 5% growth, the UN - 5.2%, and the Eurasian Development Bank - 5.5%.

Armenia has been a member of the Eurasian Economic Union (EAEU), which also includes Russia, Belarus, Kyrgyzstan and Kazakhstan, since 2015. In addition, on January 9, the Armenian government approved a draft law on the country's accession to the European Union. A decision on Armenia's EU membership should be made through a nationwide referendum, Armenian Prime Minister Nikol Pashinyan said.

Russian Deputy Prime Minister Alexei Overchuk later said that Armenia's discussion of the bill initiating the EU accession process could be seen as the beginning of the country's exit from the EAEU. Commenting on the Armenian government's decision, Overchuk said that the EU and the EAEU are incompatible, in particular because "both unions entail the absence of customs borders and the free movement of goods, services, capital and labor."