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Private remittances to Armenia fell by more than 40 percent in January as compared to the same period last year, according to the Central Bank.

In the first month of this year the amount of money transferred to Armenia mostly by migrant workers abroad stood at some $72.2 million compared to over $122.5 million worth of private remittances reported for January 2014.

Remarkably, the amount of private remittances wired from Russia fell by over 56 percent – from about $87.2 million in January 2014 to some $38.4 million in January 2015.

Private remittances are known to be the largest source of hard currency inflows into Armenia. In 2014, for instance, Armenian exports totaled a little more than $1.5 billion, while private remittances provided more than $2.1 billion. But even last year the private remittances fell by 7.7 percent as compared with 2013.

Economic analyst Ara Galoyan expects poverty to increase in Armenia amid the falling money transfers and expected modest economic growth.

“It is patently clear that Armenia’s main export item is labor force. Every year our citizens go to Russia and send part of their incomes back home,” says Galoyan.

According to the economic analyst, despite the fact that this year Armenia joined the Russian-led Eurasian Economic Union, which, among other things, implies free movement of labor, Armenians have had fewer opportunities for migrant work in Russia lately.

“The Russians are closing markets for our labor, and it has already been stated officially that this year fewer people from Armenia will go for migrant work to Russia,” he said.

Another factor contributing to the fall in private remittances is the deteriorating economic situation in Russia, which is currently under Western sanctions over the crisis in Ukraine.

Amid the sanctions and falling international oil prices the Russian ruble has lost over 40 percent of its value against the U.S. dollar since early 2014, which also affected the incomes and opportunities of Armenians working in Russia.

The Russian ruble’s steeper depreciation than that of the Armenian national currency, the dram, also affected Armenia’s export potentialities connected with Russian markets.

“The goods traditionally exported to Russia have become more costly for the Russian market,” Galoyan explains. “Armenian winemakers are already concerned over the increased cost of their products and Armenian wines and brandies already sell poorly in Russia. In other words, even traditional exports will have problems in this regard.”

According to a report published by the Central Bank last month, Armenia’s economic growth this year may be 10 times lower than expected by the government. While the government plans to ensure this growth at over 4 percent, the Central Bank evaluates the potential of the country’s economy to expand in 2015 at only 0.4-2 percent. The Central Bank also expects that private remittances will fall by approximately 30 percent this year.

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