Cash remittances sent home by Armenians working abroad jumped by 57.5 percent to $668.6 million in the first half of this year, helping Armenia to sustain robust economic growth and finance its massive trade deficit.
The figure released to RFE/RL by the Central Bank of Armenia (CBA) on Tuesday is equivalent to 15 percent of the country’s first-half Gross Domestic Product. It measures only the amount of remittances processed by Armenian commercial banks. Comparable sums are believed to enter the country through non-bank transfer systems.
The bank transfers, most of them coming from Russia and the United States, already rose by 37 percent to a record-high level of $1.32 billion last year. The latest CBA data put them on course to set a new record in 2008.
The multimillion-dollar remittances have been a key source of revenue for a considerable part of Armenia’s population ever since the economic collapse of the early 1990s that forced hundreds of thousands of people to go abroad, mainly to Russia, in search of employment. Economists agree that they have also been a major factor behind Armenia’s economic growth, significantly boosting domestic consumer demand and the booming construction and services sectors. According to official statistics, the Armenian economy expanded by 10.3 percent in the first half of 2008 and is thus on track to register a double-digit growth rate for the seventh consecutive years.
The remittances have also been the main source of financing for the country’s widening current-account trade deficits. Official figures for the first half show the trade imbalance skyrocketing by 66 percent to $1.39 billion on the back of a 40 percent surge in imports. Armenian exports, by contrast, fell by about one percent to $520 million.
The rising amounts of money sent by migrant Armenian workers to their relatives are also thought to have been instrumental in the more than 90 percent nominal appreciation of the Armenian national currency, the dram, against the U.S. dollar registered in the past five years. The dram’s strengthening stopped late last year, possibly due to the start of Armenia’s dramatic presidential race and the resulting political turmoil. The process resumed in May, with the dram gaining more than 2 percent in additional value against both the dollar and the euro since then.