Friday, July 10 2020 17:29
Karine Melikyan

The inflow of transfers of individuals to Armenia continues to  decline

 The inflow of transfers of individuals to Armenia continues to  decline

ArmInfo. The inflow of transfers  from Russia to Armenia in January- May 2020 sharply accelerated the  y-o-y decline to 31% from 1.1% in the same period of 2019. And the  dynamics of the outflow of transfers from Armenia to the Russian  Federation also unfolded in the direction of the 24.4% decline,  against the 6.6% growth a year earlier. This accelerated the y-o-y  decline in the net inflow of transfers from Russia to 37.7% in  January-May 2020 from 7.8% in January-May 2019. According to the  Central Bank of Armenia, in January-May 2020, the inflow of transfers  from Russia amounted to $ 242.9 million, and the outflow to the  Russian Federation - $ 133.4 million, which formed a net inflow in  this direction at the level of $ 109.5 million.

The deterioration of the dynamics is observed for transfers in the  direction of the United States. In particular, the y-o-y growth in  inflows from the United States slowed sharply to a stagnant 1.1% in  January-May 2020 from 36.8% in the same period of 2019, with the  outflow trend in the United States reversing from 24.5% growth to 42,  2% decline. As a result, the inflow of transfers from the United  States amounted to $ 106.5 million in January-May 2020, and the  outflow-$ 58.8 million, forming a net inflow of $ 47.7 million (with  an annual 13-fold growth).

In total, the inflow of transfers of individuals to Armenia turned  the y-o-y dynamics in January-May 2020 towards a 22.5% decline from  13% growth in the same period of 2019, amounting to $ 546.2 million.  The same trend deterioration was observed in the outflow of transfers  - a reversal from 11% growth to a 22.1% decline, the volume of which  amounted to $ 397.2 million. As a result, the y-o-y dynamics of the  net inflow of transfers unfolded from an 18.8% growth in January-May  2019 towards 23.4% decline in January-May 2020, with the absolute  value dropping to $ 149 million. In the inflow, Russia's share in  January-May 2020 fell to 44.5% from 50% in January-May 2019 (against  57.1% in January-May 2018), having also decreased in outflow - from  34.6% to 33.6% (against 36% in January-May 2018). And the share of  the USA in the inflow, on the contrary, increased in y-o-y terms from  15% to 19.5% (against 12.4% in January-May 2018), while decreasing in  outflow from 20% to 14.8% (against 17, 8% in January-May 2018).

In January-May 2020 (May compared to December 2019), the inflow of  transfers of individuals to Armenia decreased by 52.8%, and in May  alone with a 12.6% increase from April decline by 23.1%, while a year  earlier, a five-month decline of 2.8% was accompanied by a May  increase of 17%. A similar downward trend was demonstrated by  outflows - by 56.2% in five months, with a 1.3% increase in May from  April decline of 28.5%, compared with last year's 8.2% decline in  five months in May 2 5% growth. In the structure of the inflow, the  five-month decline in transfers from Russia by 60.2% was accompanied  by a May increase of 27.5% (from the April decline by 33.3%), with a  similar trend in outflows - a 59.5% decline in 5 months amid an  increase of 27.6% in May (from the April decline of 43.1%). As for  transfers in the direction of the United States, the five-month  dynamics of inflows and outflows are multidirectional, while in May  in both cases an increase is registered. So, the decline in the  inflow of transfers from the United States for five months by 17.9%  was accompanied by an increase in outflow by 12.9%, and in May alone  the increase in inflow was 30.3% with an increase in outflow by 10.9%  (versus the April decline by 19 , 5% and 34.5%). As a result, the net  inflow of transfers from Russia was in decline for five months  (61.1%) with a 27.3% increase in May, while from the USA it was in  decline for 5 months - by 36.5% with acceleration growth in May to  60.4%. As a result, the five-month dynamics of the current year in  comparison with last year demonstrates a significant subsidence of  rates.

According to the June forecast of the Central Bank of the Republic of  Armenia for 2020, a significant decline in the inflow of private  transfers of individuals is expected - by 22-25% (against the actual  growth of 9.7% in 2019, moreover, from Russia - with the trend coming  out of the decline by 0.6% growth). The Central Bank causes the  deterioration of the forecast for money transfers of individuals to a  significant recession in the Russian economy in the face of a sharp  decline in oil prices. In parallel, a temporary ban on entry into the  country, introduced by Russia as part of measures to prevent the  spread of the coronavirus pandemic, will have a significant impact on  the decline in remittances. But the CBA notes that in contrast to  previous years in 2020, the impact of the decline in remittances on  GDP decreased incomparably. The Central Bank revised this forecast  for transfers along with the worsening expectations for Armenia's GDP  towards a 4% decline in 2020. According to the Central Bank of the  Republic of Armenia, in 2019, Russia's share in the structure of  private transfers inflows decreased from 59% to 54%.

In its June forecast for 2020, the World Bank predicts a 6% drop in  Russia's GDP, and it expects a slightly higher decline in the US  economy - by 6.1%, and a 2.8% drop in Armenia's GDP. At the same  time, the June IMF forecast expects a more serious decline in  Russia's GDP in 2020 - by 6.6%, and a drop in the global economy by  4.9%, and the US economy - by 8%, which will deepen the negative  forecast for Armenia's GDP (from 1, 5% decline according to the April  forecast of the IMF). According to official Russian estimates: the  Central Bank of the Russian Federation expects the fall of Russian  GDP in 2020 in the range of 4-6%, the Ministry of Economic  Development of the Russian Federation - by 5%. 

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