Damage from Earthquakes in Armenia Could Reach $2.4 Billion: KZHB

In Armenia, located in an active seismic zone, damage from potential earthquakes could reach $2.4 billion. This estimate is presented in the study titled "Assessing the Potential Impact of Natural Disasters on the Debt Sustainability of Armenia, Kyrgyzstan, and Tajikistan," prepared by analysts from the Eurasian Stabilization and Development Fund (KZHB).

The research includes country profiles that provide systematic information on geography, climate, demographics, and the economy, as well as a summary and analysis of data from previous natural disasters.

It is noted that between 1992 and 2023, the most common natural disasters in Armenia were storms (38%) and floods (23%). However, the most significant damage was caused by the drought in 2000 (equivalent to $170 million in 2022 prices) and the Spitak earthquake of 1988 (equivalent to $34.6 billion in 2022 prices).

Direct losses from earthquakes in the country could amount to $2.4 billion, which represents 12.3% of the GDP at the 2022 level. The southern region of Lori Province is identified as particularly vulnerable, according to the report.

As for the potential for extreme drought, economic losses in Armenia could represent 4-5% of GDP. Such an estimate assumes complete destruction of crop areas in the most vulnerable regions (Ararat, Armavir, and Aragatsotn) as well as a decrease in livestock production volumes.

KZHB experts have developed an algorithm for action that can be used to assess the impact of natural disasters on macroeconomic parameters and the debt sustainability of the state. "The presented approach and estimates can be used for the development of fiscal strategies, as well as for formulating strategies to withstand natural disasters and adapt to their consequences," noted Sergey Ulatov, Deputy Executive Director and Chief Economist of KZHB. He stated that this would contribute to more effective management of financial risks and the sustainability of economic development.