ArmInfo.The Russian-Ukrainian war has radically changed the economic landscape of Armenia. In 2022, there was a significant increase in money and capital flowing in the country. However, in 2024, there was not only a decrease in this influx, but also an outflow, which poses a serious threat to the stability of the banking system. This is stated in the economic analysis done by Aghasi Tavadyan, an expert at the Amberd Research Center and the founder of the analytical portal tvyal.com
The expert notes that in 2022, an unprecedented amount of capital came to Armenia, primarily from Russia. As a result, the volume of transfers increased by 2.5 times, from 2.1 billion US dollars to 5.2 billion US dollars. The volume of funds received from Russia alone quadrupled, rising from $865 million to $3.6 billion. This huge influx of capital brought about two important changes. Firstly, the dram strengthened significantly going from AMD 480 to AMD 05 per dollar. Secondly, the profitability of the banking system reached an unprecedented level: with profits nearly tripling to 255.6 billion drams. Ardshinbank alone reported a profit of 62.2 billion drams.
It is noteworthy that until 2022, most remittances from Russia were sent by labor migrants. However, since 2022, the situation has changed dramatically: remittances have become predominantly commercial in nature. This shift meant that Armenia became a country that capital, not labor. With the income tax refund law fully in effect in Armenia (within the framework of mortgage lending - ed.), a significant part of this capital was directed to the construction sector. In 2023, the growth rate slowed to 9.7%, but the volume of inflows remained impressive at $ 5.7 billion. In 2024, the situation changed again. Transfers to Armenia slowed down, while the amount of money leaving Armenia increased significantly. In 2023, the growth rate slowed to 9.7%, but the inflow remained impressive at $ 5.7 billion. In 2024, the situation changed again. Transfers to Armenia slowed down, while the volume of money leaving Armenia increased significantly.
December 2024 is particularly noteworthy - $ 691 million came from Russia alone, compared to $ 300 million in previous months. This sharp increase without any economic justification may indicate that we are on the verge of a new phase of capital outflow, according to Tavadyan.
Where does the money from Armenia go?
< Interestingly, the majority of the outflow - 20.3% - comes from the United Arab Emirates. This is not a coincidence. Nearly half of Armenia's exports go to this country, primarily re-exports of gold and diamonds from Russia. The United States follows in second place with 13.5%, and Switzerland is in third place with 10.5%. Together, these three countries make up almost half of the outflow. The most interesting change has occurred with remittances from labor migrants. In 2013, about 20% of Armenia's income came from labor migrants, when 1,000 rubles were worth 12,000 drams. Today, the situation is completely different. The ruble has depreciated (1,000 rubles = 4,000 drams), and the dram has strengthened. As a result, the share of income from migrant labor in GDP has fallen to 4%, of which only half comes from Russia. Yesterday's "khopanchi" is now building new buildings in Yerevan, the economist notes.
Signs of a potential economic decline
The decrease in capital inflows (9.7% growth in 2024 compared to 146% in the previous year) and the rise in outflows (14.7%) pose a serious threat to the stability of the banking system.
Aghasi Tavadyan concluded.
