Inflow of transfers from Russia to Armenia is declining, while the  growth of cash outflow to Russia is slowing down

ArmInfo. The inflow of  transfers from Russia to Armenia in the first half of 2019 turned the  trend vector downward by 3.7% per annum from a 12.8% growth in the  same period of 2018.

At the same time, the outflow of money in the  Russian Federation remained in upward trend with a slowdown of y-o-y  rates to 6.7% from 9.3% in the same period of 2018. This worsened the  dynamics of the net inflow of transfers from Russia from the 15.6%  y-o-y growth in the first half of 2018 to the 11.3% y-o-y decline in  the first half of 2019. According to the Central Bank of the Republic  of Armenia, the inflow of transfers from Russia amounted to $ 444.2  million in the first half of 2019, and the outflow to the Russian  Federation - $ 208.3 million, which formed a net inflow in this  direction at the level of $ 235.9 million.

The transfers towards the USA demonstrated the opposite trend. In  particular, the y-o-y growth in inflows from the United States  accelerated sharply from 14.6% in the first half of 2018 to 33.5% in  the first half of 2019, while the growth in outflow to the United  States accelerated from 25.3% to 38.9%. As a result, the volume of  the outflow of transfers to the United States began to prevail over  the inflow (outflow = $ 129.7 million, inflow = $ 127.8 million),  while in the first half of 2018 and 2017, the inflow dominated. The  net inflow of transfers from the United States dropped from a  positive level to a negative one, having decreased 2.8-fold in y-o-y  terms (H1of 2019 against I H1 of 2018).

In total, the inflow of transfers of individuals to Armenia  accelerated the growth in the first half of 2019 to 10% per annum  from 8.7% in the first half of 2018, amounting to $ 866.6 million. At  the same time, the growth rate of the outflow of transfers slowed  down - from 24.9% to 18.8% , amounting to $ 636.4 million.  This  slowed down the y-o-y decline in the net inflow of transfers from  14.8% in the first half of 2018 to 8.7% in the first half of 2019,  forming at the level of $ 230.2 million. In the inflow, the share of  Russia decreased from 58.5% in the first half of the year 2018 to  51.3% in the first half of 2019, which was also observed in the  outflow - from 36.5% to 32.7%.

In Q2 2019 alone, the total inflow of transfers of individuals to  Armenia increased by 21.4% (against an increase of 19.8% in the Q2 of  2018), and the outflow went up 22% from the downward 4.1% in the same  quarter of 2018. As a result, the quarterly growth in net inflow of  transfers slowed from 96.9% in the second quarter of 2018 to 19.6% in  the second quarter of 2019. In particular, the inflow of transfers  from Russia for the II quarter of 2019 increased by 27.1%, with a  decrease in outflow by 26% (against an increase in inflow by 28.6%  and a decline in outflow by 7.3% for the II quarter of 2018), which  increased the net the inflow of transfers from Russia 2.1-fold  (against 64.8% quarterly growth a year earlier). While transfers to  the US showed a quarterly increase in both inflow and outflow - by  22.5% and 46.4%, respectively (against an increase in inflow by 16.2%  and a decline in outflow by 8.8% for the second quarter of 2018),  which reduced the net inflow of transfers from the United States  3.4-fold (against a quarterly growth of 3.5-fold a year earlier) with  negative dynamics due to the prevalence of outflow over the inflow.  

According to the updated forecast of the Central Bank of Armenia for  2019, the range of expected growth in net inflow of private transfers  is kept in the range of 5-7%, in tune with the forecasted development  of the Russian economy (according to WB forecasts, the growth in 2019  is 1.2%, accelerating in 2020 to 1.8 %- Ed. note),  from which the  dominant volume of remittances comes from. In terms of GDP growth,  the Central Bank of Armenia improved its forecast for 2019, expecting  a range of 5.9-7.4%, against previously forecasted 4.6-6.1%.  To  recall, throughout 2018, the influx of transfers of individuals to  Armenia slowed down growth to 1.7% from 14.6% in 2017, amounting to $  1.786 billion. At the same time, the growth rate of outflows of  transfers slowed slightly - from 21.2% in 2017 to 20.1% in 2018,  amounting to $ 1.188 billion. This worsened the dynamics of the net  inflow of transfers from 7.1% growth in 2017 to 22.1% decline in  2018, forming at the level of $ 597.2 million. In 2018, in inflow the  share of Russia decreased from 60.6% to 58.8%, and in the outflow, on  the contrary, increased from 38% to 39.7%.