ArmInfo.Further depreciation of the ruble will lead to the loss of competitiveness of goods of Armenian origin in the Russian market and a decrease in the pace of economic activity in Armenia. Economist Suren Parsyan expressed this opinion in an interview with ArmInfo.
The expert noted that the developments around Ukraine were a shock to the world economy. Foreign banks and financial institutions severely limited funding programs, which reduced economic activity. This, in turn, led to a reduction in energy demand and a sharp decline in oil and gas prices. Thus, if last year 1 thousand cubic meters of gas cost EUR 2,500-3,000 on the European market, today it is EUR500-600. There is a similar situation in the oil market as well.
Pricing in the energy market was influenced both by the establishment of a price ceiling for oil products of Russian origin, and by Russia's desire not to lose the Asian market, which is why Russian oil is sold there cheaper than its exchange value. The decline in prices continues.
And, since Western sanctions, as well as a sharp reduction in oil and gas revenues (or 20-25% of exports), which provide more than 40% of Russian budget revenues, led to a decrease in dollar flows to the Russian Federation, the Russian ruble began to depreciate against the US dollar.
<This will have its natural negative impact on the economy of Armenia, since Russia is Armenia's number one trading partner. In 2022, Armenian exports to the Russian Federation tripled - up to $2.4 billion (Russia's share in exports between the Republic of Armenia and the Russian Federation in 2022 increased from 28% to 45%, ed. note). And as a result of the devaluation of the Russian ruble, Armenian products in the Russian market become more expensive, and therefore lose their competitiveness, while Russian products in the Armenian market, on the contrary, become cheaper. If this situation with the ruble persists, the export of goods of Armenian origin to the Russian Federation will decrease>, the expert believes.
In addition, as Parsyan notes, the "weak ruble" reduces the consumption of about 80,000 Russians who temporarily moved to Armenia, because they can buy less goods and pay for less services by the devalued ruble they brought with them. <Last year's GDP growth in Armenia by 12.6% was mainly provided by immigrants. And now the reduction of the financial potential of this factor, the increase in the competitiveness of goods of Russian origin in the Republic of Armenia, as well as the decline in consumption in Russia itself, will naturally affect the indicators of economic growth in Armenia>, the expert forecasts.
As for the risks for Armenia to fall under secondary sanctions if its actions are found to be in violation of requirements from the United States or Europe, which the United States government warned about a month earlier, also pointing to Armenia as a country <was used as a <transshipment point> for the illegal redirection of prohibited goods to Russia or Belarus>, then Parsyan admits that the export of equipment from the Republic of Armenia to the Russian Federation in 2022 increased dramatically.
"The export of goods of Armenian origin could not have grown so much, considering that the Upper Lars checkpoint was closed for several months," he says. "Today, Russia needs various equipment and technologies that are purchased through third countries," the economist adds.
According to him, in 2022, Armenia exported goods worth 61 million dollars to Turkey, 98% or about $60 million of which is gold (according to the Customs Service, in the first half of the year, the volume of exports from Armenia to Turkey amounted to $20.3 million, of which $20.1 million is gold, ed. note). <We don't have that much gold. This is sanctioned Russian gold, which, through various manipulations in Armenia, was further exported to Turkey>, the expert believes, recalling that in August 2022 the State Revenue Committee of the Republic of Armenia stopped an attempt at large-scale gold smuggling from the Russian Federation to the Republic of Armenia. It was from this month, according to the economist, that this channel for the export of Russian gold to Turkey was closed.
At the same time, Suren Parsyan emphasizes, the Armenian government, the Central Bank and the Union of Banks of Armenia are extremely attentive to such risks. For example, the UBA regularly publishes reminders on how to work in order not to fall under sanctions, and the banks themselves "watch" for the accounts and money transfers of citizens of the Russian Federation.
The Russian currency has been gradually losing its positions since the beginning of 2023. Experts now consider the dynamics of oil prices to be one of the main factors affecting the ruble exchange rate. According to the Central Bank of the Russian Federation, the US dollar exchange rate today is RUB77.95/$1. At the same time, the average nominal exchange rate of the dollar against the ruble in 2022 amounted to RUB67.46/$1 against RUB73.65 /$1 in 2021. Russian experts forecast that the devaluation of the ruble will continue in the future, and the rate in the next two months will reach the level of 80-85 rubles, and note that this is not the limit.
It also became known earlier that the number of Russian families with savings has decreased since the beginning of this year - now they are less than half. According to a survey conducted by the Romir research holding, if in January 2023 51% of the families surveyed reported having savings, by the end of March their number had dropped to 49%. According to experts, the population of Russia will gradually become poorer, as goods will become more expensive, but incomes will remain the same: they will have to reduce consumption, switch to lower quality and cheaper products and goods.
It should be noted that the average exchange rate of the Russian ruble in Armenia as of April 4 2023 is AMD4.95 /RUB1. At the same time, in January-December 2022, the average settlement exchange rate of the ruble in the Armenian foreign exchange market amounted to AMD 6.48.
