Individual cash remittances sent to Armenia through commercial banks decreased by approximately 14 percent in the first half of this year, following a sharp rise triggered by Western sanctions against Russia, according to official data.
The Armenian Central Bank reported that these transfers amounted to $2.52 billion during this period, with nearly two-thirds of the funds originating from Russia.
For years, Armenians working in Russia, the United States, and other countries have accounted for the majority of remittances, which have been a vital source of income for a significant portion of Armenia’s population. However, this trend shifted after Russia’s invasion of Ukraine in February 2022, which led to a wave of Western sanctions against Moscow.
These sanctions had notable positive impacts on the Armenian economy, as many local entrepreneurs capitalized on the situation by re-exporting various Western goods to Russia. Additionally, tens of thousands of mostly young, well-educated Russians relocated to Armenia throughout 2022.
As a result, officially recorded remittances surged from $2.1 billion in 2021 to $5.2 billion in 2022 and $5.7 billion in 2023. Remittances from Russia alone quadrupled to nearly $3.6 billion in 2022.
However, many of these Russian expatriates in Armenia are believed to have returned home or moved to other countries. More significantly, there are growing indications of a decline in sanctions-driven re-exports, which began in late 2023. Government data shows that Armenia’s total exports to Russia dropped by over 20 percent, falling to $1.4 billion in the first half of 2024.
During a July 30 press conference in Yerevan, Armenian Central Bank Governor Martin Galstyan pointed to additional factors contributing to the decline in remittances. He noted a significant reduction in the number of Armenians traveling to Russia for seasonal work, particularly in construction, due to a shrinking wage gap between the two countries.
Galstian also mentioned that Armenian banks have increasingly restricted transactions with Russia to comply with U.S. sanctions. Consequently, more seasonal migrant workers are opting to carry their earnings in cash when returning to Armenia, rather than transferring the money through Armenian banks.
