Monday, November 20 2023 14:09

ArmInfo. The net inflow of private transfers to Armenia for 9 months of 2023 dropped to $1.3  billion from $1.7 a year earlier. According to the data of the Central Bank of RA, the y-o-y dynamics of this indicator turned sharply from a 2.6-fold increase to a 23% decrease.

The decrease in volumes is caused by the deterioration of the dynamics of inflow of  transfers, maintaining a high level of outflow. In particular, in  terms of inflow of remittances, its growth slowed down from Russia,  decreased from the USA, and in terms of outflow, it significantly  accelerated both in the direction of Russia and the USA.

Thus, the influx of transfers from Russia to Armenia in Jan-Sept2023  sharply slowed down in y-o-ygrowth from 3.7 -fold to 30%, along with  which the growth of the outflow of transfers from Armenia to Russia  significantly accelerated - from 7.4% to 71%. As a result, the y-o-y  growth of the net inflow of transfers from Russia sharply slowed down  -from 5.8-fold to 23%. Consequently, the volume of inflow of  transfers from Russia for 9 months of 2023 amounted to $3 billion,  and the outflow to the Russian Federation - $504.6 million, which  formed a net inflow in this direction at the level of $2.5 billion.

At the same time, the influx of transfers to Armenia from the USA in  Jan-Sept 2023, worsening in y-o-y dynamics from 18.2% growth to 2%  decline, amounted to $483.7 million, along with which the outflow of  transfers from Armenia to the USA continues to grow high with an  acceleration of the pace from 38% to 54%, amounting to $324.1  million. As a result the y-o-y dynamics of the net inflow of  transfers from the United States worsened - from a 1.5% increase to a  43% decline, the volume of which dropped to $159.6 million.

In total, the influx of private transfers to Armenia, having sharply  slowed down in y-o-y growth from 2.3- fold to 23%, amounted to $4.3  billion in Jan-Sept 2023. . In parallel with this, the upward trend  in the outflow of transfers slowed down more modestly - from 2-fold  to 69%, providing a volume of $2.9 billion.  This caused a decline in  the net inflow of transfers, which showed a multiple growth just a  year ago.  As a result, Russia's share in inflows increased over the  year from 67% to 70%, while slightly decreasing in outflows - from  18% to 17%. The US share of both inflows and outflows fell by 11%  each from last year's 14% and 12%, respectively.

The Central Bank of Armenia in its updated September forecast for  2023 forecasts a more noticeable decline in the net inflow of private  transfers, due to the impact of the slowdown in economic activity in  Armenia's trading partner countries, as well as a reduction in  remittances in dollar terms due to the sharp devaluation of the  Russian ruble from July this year. According to new forecasts of the  Central Bank of the Republic of Armenia, the ratio of private  transfers to GDP will decrease to 3.9% in 2023 (from 8.3% in 2022),  and then decrease y-o-y - to 3.2% in 2025, which indicates the  duration of the weakening of the economic effect in terms of the  impact of transfers on the economy. In the same forecast report, the  Central Bank improved expectations for 2023 for Armenia's GDP growth  from the previous 6.9% to an updated 7.2% (against actual growth of  12.6% in 2022), while forecasting a slowdown in growth rates of up to  5.6% for 2024. 

As a comparison, we note that in 2022, the influx of private  transfers accelerated in y-o-y growth from 14.5% to 2.5-fold  (4.2-fold- from Russia ), reaching a record $5.2 billion. The same  change in y-o-y dynamics was observed in outflow of transfers - from  a 3.3% decline towards an increase of 2.1-fold (by 74% -to the USA),  and also to a record $2.6 billion. As a result, the net inflow of  remittances from individuals sharply accelerated in growth from 53.8%  up to 3-fold, reaching a historical maximum of $2.6 billion. The  increase in transfers from Russia was due to the influx of a huge  number of immigrants  from the Russian Federation to Armenia, who  moved here along with their businesses and capital. Moreover, this  move to Armenia of over 100 thousand immigrants took place in two  impressive flows - from the end of February 2022 (with the outbreak  of Russia's war against Ukraine) and in September of the same year  (with the announcement of mobilization in the Russian Federation),  since in their homeland they faced difficulties with work, financial  and card transactions due to unprecedented large-scale anti-Russian  sanctions (including disconnection from the S.W.I.F.T. system,  withdrawal from the Visa and MasterCard market, blocking of Western  social networks)