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Between 2017 and 2019, One of the Caucasian country's economies increased fast, with yearly GDP growth averaging 6.8 percent. Following the political realignment of 2018, prudent macroeconomic measures helped develop a track record of macroeconomic stability and an improved business climate.

However, in 2020, the twin shocks of the COVID-19 pandemic and the military conflict with neighboring countries disrupted economic progress, resulting in a 7.4 percent recession.These shocks were accompanied by a surge in poverty, particularly among urban residents and those who were not adequately served by the government's pension and social assistance programs.

The budgetary reaction of the government to the pandemic, which included expenditure packages and some tax exemptions, along with a drop in income owing to the economic slowdown, resulted in an increase in the public debt ratio to 67.4 percent of GDP in 2020.

Although a recovery is beginning, long-standing structural concerns, such as poor connectivity, the budgetary constraints of an aging population, sizeable external emigration, widespread informality, and skill mismatches, hinder the country from attaining its full potential.The region's geopolitical tensions continue to erode investor confidence and worsen current issues.