Trans-Caspian corridor development could lift Armenia’s GDP by 3.4% or $873 million

Development of the Trans-Caspian Transport Corridor, which links China and Europe via Central Asia, the Caspian Sea, the South Caucasus and Türkiye, could raise Armenia’s gross domestic product (GDP) by 3.4%, or $873 million, in the long run, and employment by 3.9%. According to a World Bank report on the corridor, GDP across its nine countries would rise by 3.3% on average and employment by 2.9%, with small landlocked economies such as Armenia gaining proportionally more.

The authors describe Armenia as a beneficiary country of the corridor that will become part of it once direct through links are built, so the 2023–2040 analysis treats it as a corridor country. The 3.4% GDP gain is equivalent to an extra 0.33% of growth a year over ten years. Armenia’s railway operator was not assessed in detail because of data limitations and its still limited integration into the corridor, though the authors expect its role to grow as connectivity expands.

In 2022–2024 average growth in Armenia, Georgia and the Kyrgyz Republic exceeded 8–9%, driven by post-pandemic recovery, redirected trade and financial flows, and migration. The report forecasts growth in the South Caucasus slowing to just above 3% as Azerbaijan’s oil output declines and Armenia and Georgia normalize.

Armenia’s borders with Azerbaijan and Türkiye, about 83% of its land boundaries, have been closed for decades, and the country’s external freight moves mainly through Georgia. In 2023 road transport carried more than 80% of Armenia’s trade, and over 65% of that volume, around 3.3 million tons, passed through Georgia alone. The single operating rail link with Georgia handled another 1.1 million tons, while maritime trade, also routed mostly through Georgian ports, totaled 2.4 million tons. The World Bank concludes that this concentration of routes raises the risk of congestion and external disruptions and deprives Armenia of revenue from transit freight. Armenia’s cargo volumes across the Caspian remain small but support jobs in warehousing and border logistics and could expand significantly.

The Armenian government’s Crossroads of Peace initiative could change this picture by restoring or building cross-border rail and road links with Azerbaijan and Türkiye. Reopened borders and operational crossing points would give Armenia access to rail and road corridors linking the Caspian Sea to the Mediterranean, the Black Sea and the Persian Gulf, attracting investment and generating jobs.

The report ranks a railway connecting Azerbaijan and Türkiye via southern Armenia, estimated at about $2.7 billion, third among the corridor’s 16 priority infrastructure investments, after a rail crossing of the Bosphorus ($8.2 billion) and the Uzbekistan-Kyrgyz Republic-China railway ($4.7 billion). The project is not yet under way in all three participating countries. The model assumes the Baku-Kars branch via Armenia starts operating in the early 2030s. It is projected to be operationally competitive with the Baku-Tbilisi-Kars railway, partly thanks to a shorter and more direct route. In 2040 China-Europe transit container freight would account for 7.5% of demand on this branch (against an average of 4.5% across the 16 projects), meaning it would rely mainly on regional cargo.

The report does not use the name Trump Route for International Peace and Prosperity (TRIPP), but the Armenian section of this link via southern Armenia is TRIPP, a key component of the Crossroads of Peace initiative and part of the Trans-Caspian corridor. BusinessDaily has reported that TRIPP is a multimodal route of about 43 km through Syunik province that will link Azerbaijan with Nakhijevan and include a railway, a road, pipelines, fiber-optic and power lines. The United States will hold 74% of the company developing it and Armenia 26%, and the company will receive exclusive land-use rights for 49 years. According to Prime Minister Nikol Pashinyan, the project will create a direct rail link between Armenia and Azerbaijan, integrate Armenia into the international rail network and open the way for a rail connection between the Persian Gulf and the Black Sea.

In September the U.S. Department of State announced the official launch of the TRIPP+ fund (Trans-Caspian Enterprise Fund), a $201 million grant running to 2036 to develop the route linking Central Asia and the South Caucasus with U.S. and European markets, along with plans to allocate, jointly with Congress, about $200 million more for TRIPP infrastructure. Investment through the fund was discussed in New York at the event “Prosperity through Peace: Investing in the Trans-Caspian Trade Route and TRIPP,” attended by the foreign ministers of Armenia and Azerbaijan and representatives of Georgia and Central Asian countries. Design work on the TRIPP railway, road and power lines began in October, and in November Armenia, the United States and Azerbaijan launched the first trilateral technical groups on transport and electricity transmission.

Several projects in neighboring countries are tied to the Armenian branch. Türkiye’s investment list includes rehabilitating the Kars-Gyumri railway for $150 million: track repair, electrification, signaling and telecoms on a 60-km line closed since 1993, including reopening the roughly 20-km Akhuryk-Akyaka section, though no study has been carried out yet. Expanding the Kars Logistics Center ($50 million) is meant to handle early-2030s freight with gauge-changing, customs and warehousing facilities. Azerbaijan’s planned network of dry ports ($300 million) includes a southern hub for the new route to Kars via Azerbaijan and Armenia. The authors note that the corridor’s western branches reduce dependence on any single port or rail line, which benefits all countries, Armenia included.

Under the corridor development scenario, Armenia’s exports would grow by 3.61% ($418 million) and imports by 3.77% ($547 million). This is the fastest export growth among corridor countries, ahead of Georgia at 1.61% and the Kyrgyz Republic at 1.53%. Imports of machinery and equipment would rise sharply, supporting industrial upgrading. Construction output in Armenia would increase by 10%. Agrifood exports could gain 0.07 million tons with a 5% cut in logistics costs and 0.28 million tons, or 76.6%, with a 50% cut.

Through 2040 Armenia, the Kyrgyz Republic, Türkiye and Uzbekistan are expected to lead export expansion, and more than a third of Armenia’s export gains would come from machinery, electronics and vehicles. These goods already account for about 20% of Armenia’s export value. Copper exports from Armenia and Georgia to China across the Caspian could also expand if new ferries and port facilities are introduced.

The authors stress that the branch via Armenia depends on the normalization of trade relations between Armenia and Azerbaijan and between Armenia and Türkiye, and that international experience suggests enabling logistics across borders closed for decades is a protracted challenge that should remain a top policy priority through the 2030s.

Climate is another risk. The World Bank estimates that natural hazards, mainly floods, could cause average annual damage of $20 million to Armenia’s corridor-related roads and railway (compared with $40 million in Georgia and $24 million in Azerbaijan). Lori province, through which the line to Georgia runs, is the riskiest area for railways in all of Central Asia and the South Caucasus, with expected annual damage of $6.5 million, against $1.9 million in Georgia’s Kharagauli, the next riskiest. Some mountain road sections in Armenia are also exposed to landslides and floods.