Following a sharp fall caused by the global recession, cash remittances from Armenians working abroad rose by about 10 percent in the first half of this year, contributing to Armenia’s ongoing economic recovery.
Latest data from the Armenian Central Bank put the total amount of incoming non-commercial wire transfers processed by local banks at almost $490 million, up from $447 million recorded in the same period of last year.
The overall amount of cash inflows, including funding for business transactions, rose by only 3 percent to $617 million. It was equivalent to 16.7 percent of the country’s first-half Gross Domestic Product.
Both commercial and non-commercial remittances, which benefit an considerable part of the country’s population, tumbled by roughly 30 percent last year due to the economic downturn around the world and Russia in particular. That was one of the reasons for a double-digit contraction of the Armenian economy registered in 2009. Official statistics show the economy expanding by 6.7 percent in the first half of 2010 parallel to the global recovery.
Russia, which is home to most of the hundreds of thousands of Armenian migrant workers abroad, accounted for more than 70 percent of cash sent by them to Armenia in January-June. The United States, which also has a sizable Armenian community, remained the second largest source of the remittances, contributing about 7 percent of the total.
The remittances not only boost consumer spending but also enable Armenia to run massive trade and current-account deficits. Their renewed growth was accompanied by a deepening of the country’s trade imbalance.
According to the National Statistical Service (NSS), the first-half trade deficit increased by 15.5 percent to $1.28 billion, despite a 56 percent surge in Armenian exports. It was more than offset by a 24 percent rise in imports, totaling $1.72 billion and exceeding almost four-fold exports.
Rising hard-currency inflows, which accelerated after the first quarter of 2010, appear to have also contributed to a renewed appreciation of the national currency, the dram. It has gained more than 6 percent in nominal value against the U.S. dollar since April.