Aghasi Tavadyan: Real incomes of Armenian families experienced   growth

ArmInfo. In 2023, the real incomes of Armenian families have experienced growth. Aghasi Tavadyan, an expert at the Amberd Research Center and founder of the tvyal.com analytical portal, wrote on his Facebook page.   Particularly, in 2023, the average family income increased by 15.3%  (331,000 drams). After a decline in the previous year,  high  inflation (8.3%) significantly reduced real incomes. However, in  2023, there was price stability (official inflation was -0.6%) and  growth from 2022. This eventually led to an increase in the standard  of living.  The adjusted income of the average family increased by  15.3%, from 287,000 AMD to 331,000 AMD. At the same time, the income  of the poorest category of the republic's residents (high threshold)  increased by 23.2%, from 95,000 AMD to 117,000 AMD. Additionally, the  income of the richest 10% (lower threshold) increased by 14.5%,  from  670,000 AMD to 767,000 AMD.

Regional inequality

However, this growth, as noted by Tavadyan, was not evenly  distributed across all regions. In Yerevan, the average income  increased by 15%, which aligns with the national average.  When  comparing the growth of real household income in 2020, a different  picture emerges. From 2020 to 2023 (including Yerevan), the real  income of the population increased by 16.6%. Growth was also recorded  in the Aragatsotn and Gegharkunik regions. In all other regions,  basic household incomes either decreased or stayed the same from  2020.  Redistribution of income groups

The data for 2023 shows an interesting regrouping of income groups.  35.1% of families belong to the middle and high income group  (256-512, 000 AMD), indicating the strengthening of the middle class.  The middle and low income group (128-256, 000 AMD) is 27.1%.  , the economist noted.  According to him, income  inequality has somewhat decreased. In 2022, the income of the richest  10% exceeded the income of the poorest 10% by 7.05 times; in 2023,  this ratio fell to 6.56. This is a positive trend, although  inequality remains high by international standards.  At the same  time, Tavadyan notes that the data is available since 2005. Since  2005, household incomes adjusted for inflation have shown steady  growth. According to the data, the largest growth in real incomes of  the population was observed in 2006, 2007, and 2019.

Relationship between inflation and real incomes

The growth of real incomes in 2023 was mainly attributed to price  stability. By containing inflation, nominal wage growth was able to  directly impact the increase in real incomes. According to official  data, inflation in 2023 was -0.6%,  a significant improvement from  2022, when economic growth of 12.6% was not reflected in the  population's income due to high inflation (8.3%).  In 2022, economic  growth reached 12.6%, with GDP per capita rising from 4972 to 7018  USD, marking a 41% increase. However, real incomes for the population  actually decreased.  In 2021, the average adjusted household income  was 333,000 AMD,  which then dropped to 320,000 AMD in 2022. The  poorest 10% of the population received up to 101,000 AMD in 2021, but  this decreased to 88,000 AMD in 2022.  Nominal income growth was also  recorded in 2021 and 2022. However, inflation rates were high at 7.2%  and 8.6%  respectively during these years,  significantly reducing  real income. This means that by the end of 2022, wages had not kept  pace with the inflation rate. Despite the 12.6% economic growth in  2022, this had not yet been reflected in household income or wage  growth. By the end of 2023, inflation was  almost zero, as the expert  pointed out.

Conclusion

Armenia's household income growth in 2023 indicates economic  recovery. However, regional inequality and significant income  stratification remain serious problems. Price stability played a  significant role in real income growth, highlighting the importance  of macroeconomic stability in improving living standards.