Saturday, October 1 2022 14:47
Karine Melikyan

Net inflow of remittances to Armenia continues to grow at very high  pace due to remittances from Russia

Net inflow of remittances to Armenia continues to grow at very high  pace due to remittances from Russia

ArmInfo.The net inflow of transfers from individuals in January- July 2022 compared to the same period in 2021 increased 2.3-fold (from 78.5% growth a year earlier),  exceeding $1.1 billion, which is largely supported by a multiple  growth in remittances from Russia, with a weakening upward pace of  transfers from the United States. This is evidenced by the data of  the Central Bank of the Republic of Armenia.

Thus, in January-July 2022, the inflow of transfers from Russia to  Armenia increased 3.4-fold- up to $1.6 billion, with an increase in  outflow by 9.3% - up to $240.8 million, as a result of which net  inflow increased 5.5-fold- up to $1.3 billion. However, on a monthly  term, the noticeable growth in the inflow of transfers from Russia  observed in February- changed the vector from an increase of 69.8% to  a decline of 2.1% in July, with a higher 14.9% decline in outflow  (against 14.8% growth in June), as a result of which the dynamics of  net inflow worsened - from 76.2% growth to 1.1% growth. As a  comparison, we note that a year earlier, in January-July 2021, the  inflow of transfers from Russia to Armenia showed an increase of 16%,  while the outflow was in decline by 6.2%, which formed an increase in  net inflow at the level of 47.7%.

At the same time, the y-o-y growth in the inflow of transfers from  the United States slowed down significantly - in January-July 2022 to  19.6% (from 70.2% a year earlier), against which the outflow growth  began to slow down - to 38% (from 46.6% a year earlier). which  significantly slowed down the growth of net inflow from the US to  9.9% (from 85.9% a year earlier). As a result, the volume of inflow  of transfers from the USA in January-July 2022 amounted to $375.4  million, outflow to the USA - $148.99 million, and net inflow -  $226.4 million. In July 2022 alone, the dynamics of the inflow and  outflow of transfers towards the United States worsened from  7.7-29.9% growth to 8.6-33.1% decline, and a much larger decline in  outflow than inflow changed the trend of net inflows from the US from  a 4 .6% decline to 10% growth.

In total, the inflow of transfers from individuals to Armenia sharply  accelerated y-o-y-growth in January- July 2022 from 28.3% to  2.1-fold, exceeding $2.4 billion. 99.6%, with a volume of over $1.3  billion. As a result, the y-o-y growth of the net inflow of transfers  to Armenia accelerated significantly.

The share of Russia in the inflow in January-July 2022 increased to  64.6% from 40.4% in January-July 2021 (against 52.7% in January-July  2019), and decreased in the outflow - from 33.2% to 18 .2% (against  29.8% in January-July 2019). And the share of the United States, on  the contrary, decreased year-on-year on both cases: in inflow - from  27.4% to 15.4% (against 14.3% in January-July 2019), and in outflow  from 16.3% to 11.3 % (against 20.9% in January-July 2019).  It should  be noted that Central Bank of the Republic of Armenia in its forecast  for 2022, updated in September, further reduced the decline in the  net inflow of transfers.  (including income of seasonal workers and  private transfers) - to 7% from the previous 13% (against the actual  54% growth in 2021).  In its forecast, the Central Bank bases this  improvement with the assessment of more positive developments in the  Russian economy, projected decline of which has been reduced to 4.2%,  from the previously expected 7.4%.  The ratio of individuals'  transfers to GDP, according to the new forecast of the Central Bank  of the Republic of Armenia, will decrease over 2022 from 9.3% to  6.3%, and the further expected y-o-y decline (to 4.2% in 2025)  indicates a prolonged weakening of the economic impact of remittances  on the economy. 

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