We present an article by Rafael Nahapetyants, Senior Partner at Movchan’s Group, a private equity management company, written exclusively for Banks.am.

In the Global Investment Risk & Resilience Index, the Armenian economy outperformed most of its regional neighbors and even several EU member states. We explore the factors behind this strong performance and how foreign investors perceive Armenia.

Compared to other economies

This Index reflects a combination of key factors influencing the economic performance of countries worldwide, from inflation rates and exchange-rate volatility to the risk of natural disasters and destruction.

Armenia ranked 71st in the Global Investment Risk & Resilience Index, between Serbia and Montenegro. This ranking is higher than that of Russia, Belarus, Kazakhstan, Azerbaijan, Moldova, and Greece, but lower than Bulgaria, Romania, and Georgia.

In both risk & resilience categories, Armenia received above-average scores. For example, in the risk category its neighboring countries were Kuwait and Saudi Arabia, while in the resilience category it was placed alongside countries such as Portugal and Cyprus.

According to the ranking, Armenia’s overall rating is “Favorable Outlook.” This serves as a positive signal for global investors, indicating that the country faces relatively low risks and demonstrates strong capacity to manage them effectively.

No side effects

Nevertheless, it was interesting to examine why the compilers or the ranking assessed the Armenian economy so highly. For that purpose, we contacted the authors of the Index and obtained detailed calculations for all 16 indicators used in the ranking.

First of all, Armenia’s major strength is GDP growth. Over the past five years its economy has doubled in size with average growth of around 15%. While growth has been significantly lower in recent quarters, it still exceeds 6%, which is one of the best indicators in the world. We understand the factors behind this rapid growth and realize that they largely stem from geopolitical changes. We also understand that such favorable conditions are short-lived. Nevertheless, Armenia, like Kazakhstan, has significantly benefited from the international developments of recent years.

At the same time, despite rapid growth, Armenia has avoided side effects such as an overheating economy. Inflation, which was around 0-1% a few years ago, now hovers just above 3%, which is comparable to the level of many developed countries, including the US, UK, Spain, and Japan.

A strong currency is another advantage for Armenia. As we have previously reported, the Armenian dram has exhibited extremely low volatility against the US dollar over the past 20-30 years. Over the last three years, the volatility of the Armenian dram against the US dollar has been in the same category as that of the Icelandic and Norwegian krona. It is stronger than the Polish zloty and the Japanese yen, and its currency risk is quite comparable to that of the euro.

Armenia’s hidden strength

Economic resilience can be assessed in many ways, but the ranking places particular emphasis on long-term and even natural factors (setting it apart from, for example, country credit ratings). These factors contributed the most points to Armenia.

Climate change and the associated potential losses from natural disasters pose varying levels of risk to all countries. In this context, Armenia is assessed as a very safe place: it ranks among the top 30 most environmentally friendly countries in the world.

However, Armenia’s advantages extend beyond natural factors. A sound fiscal policy (low public debt and deficit) along with social development (improving healthcare, education, and accessibility) also strengthen the country’s investment climate.

On other parameters, many of which are used to assess whether a country qualifies as a developed country, Armenia performed well but remains closer to the global average, especially in economic complexity, innovation, and investment volume.

Armenia through the eyes of investors

The share of direct foreign investment in the country’s GDP is only 20%. This is extremely low (Colombia or Egypt’s level), and below the 160th place globally. However, as global portfolio investors, we are far more interested and impressed by another figure: the share of non-resident assets in Armenian banks.

This is particularly evident in the dynamics of non-resident deposits (primarily from Russia) in Armenian banks. As of the end of 2025, these deposits exceeded 1.5 trillion drams (almost $4 billion) out of nearly 7 trillion in total deposits, exceeding 20% of funds attracted by banks. For comparison, in Cyprus, which has been considered a key hub for Russian-speaking businesses in Europe for many years, the share of non-resident funds in the banking system is currently less than 15%, and in the UAE, it is below 10%.

It is clear that investors are voting with their money for Armenia, as it is a convenient financial hub for subsequent international investment. For the clients of Movchan’s Group, Armenian banks have long served as the primary gateway to global funds. They offer reliable infrastructure, predictable transfers through the largest Armenian banks, the ability to invest in cash and in securities (in kind), and reasonable compliance requirements that align with international standards. All of this has long become an acceptable standard for investors. Capital can be managed through Yerevan virtually anywhere in the world.