Wednesday, December 28 2022 12:20

ArmInfo.The Central Bank of Armenia (CBA) has improved its forecast for net money transfers (including the profits of seasonal workers and private transfers) -  32% growth against the previously forecast 7% decline (against the  actual 54% growth last year). 

The forecast is contained in the CBA's monetary policy programme for  the 4th quarter of 2022.

According to the CBA, next year private transfers from both Russia  and the USA are expected to go down from the current high level,  which will partially be the result of declining economy in the  partner countries.  Specifically, next year, the US economy is  expected to grow by 1%, with a 0.1% economic growth expected in the  EU and a 2% decline in GDP expected in Russia against the 6.1%  economic growth in the USA, 5.5% economic growth in the EU and 4.8%  economic growth in Russia last year. 

According to the CBA's new forecast, the ratio between private  transfers and the GDP is expected to decline to 8.4% against 8.9%,  with a further decline down to 4.8% in 2025, which is evidence of a  continuously decreasing economic influence of transfers. 

According to the current development scenario, the current account  deficit/GDP ratio declined to 3.3% against 3.7% last year, with the  following increase up to 4.7% in 2023. In the medium-term, gradual  adjustment of the high foreign demand will influence the current  account deficit/GDP ratio and stabilize it within 4-6 percent. 

Net private transfers showed a 54% growth last hear against 14% in  2020 due to a 27.1% growth in private transfers from Russia against a  42.1% decline, and a 32% growth in transfers from the USA against a  50- fold growth. As a result, in 2021, the net private transfers  totaled $883.3mln. Specifically, private transfers from Russia  totaled $463.8mln and from the USA, $391.3mln.   

As regards the inflow and outflow of money transfers in 2021, the  former showed a growth, whereas the latter continued to decline.  Specifically, the inflow of private transfers to Armenia showed a  14.5% growth last year against a 6% decline in 2020 and exceeded  $2.109bln. Transfers from Armenia retained a downward trend, with a  decelerating year-on-year growth of 3.3% against 13% and totaled  $1.226bln in 2021. Money transfers from Russia showed a 5% growth  with a 12.6% decline in transfers to Russia.  Transfers from the USA  showed a decelerating growth of 26.5%, with transfers to the USA  showing a 16.5% growth against a decline. 

During last year, Russia's share in the inflow of money transfers to  Armenia decreased from 45% to 41% (against 54% in 2019), with its  share in the outflow decreasing from 36% to 33% (against 29% in  2019).  The USA's share in the inflow of money transfers went on  increasing from 25% to 28% (against 14% in 2019), with its share in  the outflow reaching 15% against 13% (19% in 2019). 

This year has seen an upsurge in transfers from Russia to Armenia due to  large-scale relocation of Russian capital and businesses. A 3-fold  increase in the net money transfers from Russia was observed this  February, with a high-rate growth in the following months. As a  result, Russia's share in money transfers to Armenia reached 68.6%  against 41.3% last January-October, due to the arrival of thousands  of Russian citizens to Armenia after the outbreak of the war in  Ukraine, which resulted in unprecedented western sanctions against  Russia (S.W.I.F.T. disconnection, withdrawal of Visa and MasterCard,  blocking of western social media). That causes problems for Russia's  population involving work, financial transactions and so on. 

As a result, this January-October, private transfers to Armenia set a  new record reaching $1.4bln - a 2.4- fold year-on-year increase.  Thus, the previous record, $2.3bln in 2013, has been exceeded by 80%.  The reason is a 4-fold increase in money transfers from Russia - up  to $2.8bln. As a result, net private transfers to Armenia showed a  2.8-fold increase - up to $2.1bln. The net transfers from Russia  totaled $2.5bln - a 6.3-fold increase.