ArmInfo.In its updated forecast for 2022, the Central Bank of Armenia reduced the decline in net remittance inflows (including seasonal workers and private transfers) to 12% from the previous 20% (against an actual 54% growth in 2021), based on the foreseeable economic downturn in Russia (by 7.4%) and the change in the dollar income of seasonal workers. This is noted in the Monetary Policy Program (MPP) of the Central Bank for Q2 2022, published at the end of June, which also indicates an improved forecast for GDP growth for 2022 from the previous 1.6% to an updated 4.9% (against the actual 5.7% growth in 2021).
The forecast notes that the inflow of remittances, after high growth in H1 2022, will begin to slow down the upward pace. In the context of a significant revaluation of the ruble against the US dollar, remittances in dollars are valued at a higher level than indicated in the previous forecast. In parallel, as noted in the previous forecast, remittances from the United States will slow down growth.
According to the new forecasts of the Central Bank of the Republic of Armenia, the ratio of individuals' transfers to GDP will decrease from 9.2% to 6.5% in 2022, continuing to decline further to 4.3% in 2025, which indicates the duration of the weakening of the economic effect in terms of the impact of transfers on the economy.
Under the current development scenario, the current account deficit to GDP will deepen to 5.2% in 2022. And in the medium term, the easing of uncertainties, as well as the recovery of the global and domestic economies, will spur the investment process towards a phased improvement, under which the current account deficit to GDP will stabilize in the estimated balanced range of 5-6%.
According to the Central Bank of Armenia, the growth of the net inflow of private remittances to Armenia in 2021 has accelerated from 14% in 2020 to 54%, which is due to the recovery of the dynamics of inflows from the Russian Federation (from the 42.1% decline to 27.1% growth), with a significant slowdown in their growth from the US ( from 50-fold to 32%). As a result, the total net inflow of private transfers in 2021 amounted to $883.3 million, in particular, from the Russian Federation - $463.8 million, and from the USA - $391.3 million.
In terms of inflow and outflow, inflow dynamics went up in 2021, while outflow lingered on the decline. Thus, the inflow of private transfers to Armenia changed the y-o-y dynamics from a 6% decline to a 14.5% increase - up to $2.109 billion, and the downtrend of the outflow of transfers from Armenia slowed down from 13% to 3.3%, amounting to $1.226 billion. This was the result of a 5% increase in remittance inflows from Russia, while outflows to Russia fell by 12.6%, while U.S. inflow growth slowed to 26.5%, U.S. outflows overcome the recession to 16.5% growth.
The share of Russia in the inflow over 2021 decreased from 45% to 41% (against 54% in 2019), while also decreasing in the outflow - from 36% to 33% (against 29% in 2019). And the share of the United States in the inflow, on the contrary, continues to increase - from 25% to 28% (against 14% in 2019), while increasing in the outflow - from 13% to 15% (against 19% in 2019).
