In its improved forecast for 2022, CBA reduces decline in net  remittance inflows to 12% from previous 20%

ArmInfo.In its updated forecast for 2022, the Central Bank of Armenia reduced the decline in net remittance inflows (including seasonal workers and private transfers)  to 12% from the previous 20% (against an actual 54% growth in 2021),  based on the foreseeable economic downturn in Russia (by 7.4%) and  the change in the dollar income of seasonal workers. This is noted in  the Monetary Policy Program (MPP) of the Central Bank for Q2 2022,  published at the end of June, which also indicates an improved  forecast for GDP growth for 2022 from the previous 1.6% to an updated  4.9% (against the actual 5.7% growth in 2021).

The forecast notes that the inflow of remittances, after high growth  in H1 2022, will begin to slow down the upward pace. In the context  of a significant revaluation of the ruble against the US dollar,  remittances in dollars are valued at a higher level than indicated in  the previous forecast. In parallel, as noted in the previous  forecast, remittances from the United States will slow down growth.

According to the new forecasts of the Central Bank of the Republic of  Armenia, the ratio of individuals' transfers to GDP will decrease  from 9.2% to 6.5% in 2022, continuing to decline further to 4.3% in  2025, which indicates the duration of the weakening of the economic  effect in terms of the impact of transfers on the economy.

Under the current development scenario, the current account deficit  to GDP will deepen to 5.2% in 2022.  And in the medium term, the  easing of uncertainties, as well as the recovery of the global and  domestic economies, will spur the investment process towards a phased  improvement, under which the current account deficit to GDP will  stabilize in the estimated balanced range of 5-6%.

According to the Central Bank of Armenia, the growth of the net  inflow of private remittances to Armenia in 2021 has accelerated from  14% in 2020 to 54%, which is due to the recovery of the dynamics of  inflows from the Russian Federation (from the 42.1% decline to 27.1%  growth), with a significant slowdown in their growth from the US (  from 50-fold to 32%). As a result, the total net inflow of private  transfers in 2021 amounted to $883.3 million, in particular, from the  Russian Federation - $463.8 million, and from the USA - $391.3  million.

In terms of inflow and outflow, inflow dynamics went up in 2021,  while outflow lingered on the decline.  Thus, the inflow of private  transfers to Armenia changed the y-o-y dynamics from a 6% decline to  a 14.5% increase - up to $2.109 billion, and the downtrend of the  outflow of transfers from Armenia slowed down from 13% to 3.3%,  amounting to $1.226 billion. This was the result of a 5% increase in  remittance inflows from Russia, while outflows to Russia fell by  12.6%, while U.S. inflow growth slowed to 26.5%, U.S.  outflows  overcome the recession  to 16.5% growth.

The share of Russia in the inflow over 2021 decreased from 45% to 41%  (against 54% in 2019), while also decreasing in the outflow - from  36% to 33% (against 29% in 2019). And the share of the United States  in the inflow, on the contrary, continues to increase - from 25% to  28% (against 14% in 2019), while increasing in the outflow - from 13%  to 15% (against 19% in 2019).