Assessment of Changes in Armenia’s Economic Potential after 2020–2023

The study assesses the transformations in the economic potential of the Republic of Armenia resulting from exogenous shocks between 2020 and 2023. The paper analyzes internationally recognized methodologies for estimating potential output, with a focus on their applicability to the Armenian economy. Using a Cobb–Douglas production function, an estimate of the dynamics in Armenia’s potential GDP is derived. The findings indicate that its average annual growth accelerated to 5.5%, driven by shifts in the labor force structure, expansion of the IT sector, and increased investment inflows. Alongside this positive trend, structural vulnerabilities were identified. The results highlight the need to adapt to macroeconomic policy, with an emphasis on sustainable development, productivity growth, and reduced external dependence.