Geography

Armenia is a landlocked, mountainous country in the Caucasus region, bordering Azerbaijan, Georgia, Iran and Turkey. It covers an area of 29,800 km2 and in 2004 had a population of about 3.0 million. The population has decreased slightly in recent years. The estimated growth rate for 2004 was –0.2 per cent (World Bank). More than 64 per cent of the people in Armenia live in urban areas, and more than half of them are in the capital, Yerevan. Armenia has a continental climate, with hot summers and cold winters. It has few natural resources and is in a seismically active zone subject to severe earthquakes. Environmental degradation and drought are serious problems.

Agriculture

About 60 per cent of the country's area is suitable for agriculture. The low-lying Ararat Valley has relatively rich, deep soils and is the principal irrigated area. At higher elevations, where only scattered areas are suitable for irrigation, the soils tend to be shallower and stony.

Between 1991 and 1992 the country's huge collective farms were dismantled and about 70 per cent of all land was privatized and distributed to small-scale farmers. This resulted in an extremely fragmented and inefficient agricultural system. An estimated 88 per cent of farms are less than 2 ha in size. The average farm includes three parcels of land, only one of which is irrigated. Although irrigation is crucial to agricultural production and productivity, only about 60 per cent of Armenian farmers have access to it.

Economy

Armenia was reputedly one of the wealthiest republics in the former Soviet Union. Then the country's economy was shaken by several major shocks: the earthquake of 1988, the break-up of the Soviet Union after 1989, the war with Azerbaijan over Nagorno Karabach, the Azerbaijani-Turkish blockade of Armenia and the economic and political collapse of neighboring Georgia. The economy shrank more than 50 per cent in two years. GDP fell an estimated 75 per cent during the first four years after independence in 1991. At the end of 1994 the government launched a comprehensive programme to stabilize the economy and initiate structural reform. This led to an average annual growth rate in GDP of 6 per cent between 1994 and 1998, despite the financial crisis in Russia at the end of the same period. Annual growth in GDP reached 7.7 per cent in the period between 1998 and 2002, registering the most rapid growth in GDP among the Commonwealth of Independent States.

As the contributions of industry, construction and services to the GDP shrank, that of agriculture and the food industry increased, rising to 46 per cent in 1993, then decreasing to about 23 per cent in 2002. In 2003 Armenian's economic output was only about 65 per cent of the 1990 level. Current output is provided mainly by low-productivity informal activities in agriculture, commerce and urban services. Since 1995 food processing has been one of the leading growth areas in the industrial sector and now accounts for about 37 per cent of gross industrial output.

The unemployment rate is high, and about two thirds of the unemployed are women.

Source: IFAD