Firebird AI’s $4 billion AI data center is the largest AI facility in the region, but Armenian firms are still slow to adopt artificial intelligence. According to the World Bank’s October 2026 Europe and Central Asia Economic Update, Armenia has a vibrant ICT sector whose firms export AI solutions but “rarely, if at all, sell to local clients.”
The main theme of the report is artificial intelligence (AI). According to the World Bank, foreign direct investment in Armenia and Georgia strengthened, led by investment in AI and digital infrastructure. The first phase of the Firebird AI data center opened in August. The 300 MW center is being built as a public-private partnership between the government, NVIDIA and Dell, with the support of local commercial banks, and targets foreign customers.
What the interviews showed
For the report, the World Bank interviewed 38 firms in five countries, including Armenia. In sectors where AI could be applied, such as logistics and financial intermediation, Armenian firms have been very slow to adopt it, relying mostly on personal use of GPT models. With limited competitive pressure, adoption depends mainly on the individual initiative of entrepreneurs and CEOs.
Examples in the report include a large agri-food holding that uses wearables to track the physiological data of individual cows and links them to milk quality and volume. A tool developed by another AI firm lets small and medium-sized enterprises photograph a balance sheet and income statement on a mobile phone and receive non-binding information within seconds on whether they might qualify for a loan.
For the South Caucasus, the report points to diaspora networks, strongest for Armenia and Georgia. In its assessment, the binding constraint is capital: markets this small lack growth-stage institutional investment, so the priority should be instruments that attract foreign institutional capital, such as co-investment vehicles and regional funds.
Growth of 5.6% in 2026
The World Bank expects Armenia’s economy to grow 5.6% in 2026, 5.3% in 2027 and 5.1% in 2028. The bank estimates GDP growth in 2025 at 7.1% (7.2% according to the Statistical Committee of Armenia).
Growth in the South Caucasus is set to slow from 3.9% to 3.5% in 2026. In 2027–2028, growth in Armenia and Georgia should average about 5.2%, as consumption growth eases from the elevated rates of previous years, boosted by re-exports, remittances and migrant inflows, while investment remains resilient. Across emerging Europe and Central Asia, growth is expected to slow from 2.6% to 2.2% in 2026.
Re-exports fade, construction grows
According to the report, earlier gains from re-exports of precious metals have continued to fade. Exports to the United Arab Emirates fell sharply as re-exports of gold and precious stones normalised after surging in previous years. Agricultural activity weakened because of weather-related disruptions and tighter Russian restrictions on Armenian food imports.
Services, particularly information and communication technology, transport and tourism-related activities, remain the key growth drivers, while strong housing and infrastructure construction added momentum in Armenia. According to the Statistical Committee of Armenia, the economic activity index rose 7.3% in January–August, and construction 24.7%.
Remittances up almost 30%
Personal transfers from abroad rose by almost 30% in the first half of 2026, as inflows from Russia grew 36%. The report estimates that Russia accounts for about 70% of transfers to Armenia.
Compared with other forecasts
The World Bank’s 5.6% is above the 5.4% built into the 2026 state budget (according to the Central Bank of Armenia’s opinion on the draft 2027 budget, 2026 growth is now also expected at 5.6%) and the International Monetary Fund’s estimate (5.25%), but below the forecasts of the Eurasian Fund for Stabilization and Development (5.8%) and the Eurasian Development Bank (6%).
