of energy is produced with fuel imported from Russia, including gas and nuclear fuel (for its one nuclear power plant); the main domestic energy source is hydroelectric. Small deposits of coal, gas, and petroleum exist but have not yet been developed.
Like other newly independent states of the former Soviet Union, Armenia's economy suffers from the legacy of a centrally planned economy and the breakdown of former Soviet trading patterns. Soviet investment in and support of Armenian industry has virtually disappeared, so that few major enterprises are still able to function. In addition, the effects of the 1988 Spitak Earthquake, which killed more than 25,000 people and made 500,000 homeless, are still being felt. The conflict with Azerbaijan over Nagorno-Karabakh has not been resolved. The closure of Azerbaijani and Turkish borders has devastated the economy, because Armenia depends on outside supplies of energy and most raw materials. Land routes through Georgia and Iran are inadequate or unreliable. GDP fell nearly 60% between 1989 and 1993, but then resumed robust growth. The national currency, the dram, suffered hyperinflation for the first years after its introduction in 1993.
Nevertheless, the government was able to make wide-ranging economic reforms that paid off in dramatically lower inflation and steady growth. The 1994 cease-fire in the Nagorno-Karabakh conflict has also helped the economy. Armenia has had strong economic growth since 1995, building on the turnaround that began the previous year, and inflation has been negligible for the past several years. New sectors, such as precious stone processing and jewellery making, information and communication technology, and even tourism are beginning to supplement more traditional sectors of the economy, such as agriculture.
This steady economic progress has earned Armenia increasing support from international institutions. The International Monetary Fund (IMF), World Bank, European Bank
