Deposits from foreigners and citizen loans increase in Armenian banks

JAMnews

Yerevan

Inflation in Armenia

“Armenia saw a record influx of remittances in 2022, almost $2.5 billion,” Martin Galstyan, the head of the Central Bank, said. About 71% of this amount was made up of transfers from Russia.

Stagnant economic ties in the South Caucasus: Three stories

Poverty

A family business in the border town of Jermuk

Foreign deposits have almost doubled

Deposits by foreign citizens in Armenia have increased by more than 96%. At the end of 2022, they amounted to 1,287,000,000 drams ($3.2 million). Deposits by Armenian citizens went up to 29.4%, or 3,370,000,000 drams (almost $8.4 million).

Thus in 2022 foreigners made more deposits in Armenian banks, while citizens of the country took out more loans. According to Galstyan, “after deducting the impact of the exchange rate” lending increased by about 15%.

Inflation in Armenia and Russian migrants

Inflation in Armenia in 2022 stands at 9.9%, instead of last year’s 7.7%. According to experts, this is due to the influx of Russian migrants

“The inflationary environment is gradually softening”

According to Galstyan, this is happening owing to a contractionary monetary policy, the strengthening of the dram, and the weakening of inflation from outside:

“However, strong demand is still reflected in the labor market and pushing up wages and prices of selected goods and services.”

Galstyan said the bank expects the weakening of the inflationary impact on Armenia from the world economy. Global inflation is also being weakened by “lower prices for certain types of raw materials and food products.”

According to the Statistical Committee, in 2022 the consumer price index in Armenia increased by 8.6%. In January-December 2022, the average monthly nominal salary in the country increased by 15.5%, or 235,576 drams ($586).

To the remark of journalists that even with the strengthening of the dram, the prices of imported goods will not decrease, Galstyan replied that, according to the Central Bank, “inflationary pressure from the commodity market is restrained.”

“According to the FAO [World Food Price Index], international prices for, for example, vegetable oil, which peaked in February last year, are now at a lower level. We see that food prices in Armenia are also declining from those peaks.”

He said that the Central Bank would take consistent and adequate action to ensure price stabilization.

According to the bank’s forecasts, if there are no deviations from the planned monetary policy, twelve-month inflation will gradually decrease and stabilize. The expected target for the second half of this year is 4%.