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.
