Trade and Economic Relations Between Georgia and Armenia in 2024: Declining Trend or New Opportunities?

The economic relationship between Georgia and Armenia has long been characterized by stability and mutual benefit. However, 2024 data reveals significant changes. Official statistics indicate that bilateral trade volume has sharply declined, a trend likely driven by regional geopolitical factors, economic transformations, and new market realities.

Compared to 2023, trade turnover fell by 24%, reaching $853.711 million, down from $1.123 billion the previous year. This decrease is primarily due to a reduction in both exports and imports, reflecting structural changes in both economies and shifting global trade conditions.

• Georgia’s exports to Armenia dropped from $787.159 million to $617.533 million, a 22% decrease.
• Imports from Armenia to Georgia declined from $336.529 million to $236.177 million, a 30% drop.

This contraction in trade turnover suggests economic instability in global markets, new regulatory frameworks, and changing demand patterns in Armenia.

Key Trade Sectors and Trends

Despite the decline, certain industries remain dominant in Georgia-Armenia trade relations:

• Georgia’s top exports to Armenia:
  • Passenger cars – $99.658 million, reflecting continued demand for automobile imports.
  • Alcoholic beverages and petroleum products – highlighting the energy and transport sectors as major trade drivers.
• Armenia’s top exports to Georgia:
  • Copper ores and concentrates – reinforcing the long-standing mining and metal trade relationship between the two countries.

Tourism as an Economic Bridge

Tourism continues to play a vital role in Georgia-Armenia relations:

• In 2024, 948,299 Armenian visitors traveled to Georgia, accounting for 12.7% of total international arrivals.
• Although the number of Armenian tourists slightly decreased by 1.5% compared to 2023, tourism remains a significant driver of economic activity, benefiting small businesses, hospitality, and service industries.

Financial Transactions and Investments

Cross-border remittances indicate that financial flows between Georgia and Armenia remain stable:

• In December 2024, remittances from Armenia to Georgia totaled $1.302 million, while Georgians sent $1.042 million to Armenia.
• These financial transactions reflect ongoing economic ties, migration trends, and labor market interactions.

In terms of foreign direct investment (FDI):

• Armenia’s total investment in Georgia reached $16.163 million in the first three quarters of 2024.
• While this figure represents a small fraction of Georgia’s overall FDI inflows, it highlights Armenian investor interest in energy, logistics, and construction sectors.

Strategic Infrastructure and Economic Collaboration

Beyond trade and investment, Georgia and Armenia share common interests in regional infrastructure development, including:

• Expanding transport corridors to improve trade flow.
• Strengthening energy sector cooperation to enhance regional energy security.
• Developing logistics and supply chain connectivity between the Caucasus and larger global markets.

Navigating the Future: Challenges and Opportunities

Despite the decline in trade volume, Georgia and Armenia’s economic ties remain strong and require new strategies for expansion. Key recommendations for improving bilateral economic relations include:

1. Diversifying Trade Sectors – Both countries should explore new industries such as technology, renewable energy, and agricultural innovation to reduce dependence on traditional exports.
2. Attracting More Investments – Enhanced bilateral investment programs could stimulate joint ventures and entrepreneurship, benefiting both economies.
3. Strengthening Digital and E-Commerce Integration – Facilitating cross-border digital trade and e-commerce platforms would open new market opportunities.
4. Enhancing Regional Economic Integration – Closer integration with European and Asian markets via strategic trade agreements could boost exports and economic cooperation.

By adopting a forward-thinking approach, Georgia and Armenia can turn current challenges into long-term opportunities, ensuring their economic partnership remains strong and resilient in the evolving global landscape.