Plummeting Russian Ruble may affect Armenia’s economy - opinions

The unprecedented plummeting of the Russian currency against the US Dollar and the decrease in the Russian financial flows to Armenia forecast serious challenges for the country’s economy, according an economist.

Speaking to Tert.am, Vahagn Khachatryan said he has serious concerns that the Central Bank will be forced to use its reserve funds under the circumstances to bridge the existing gaps.

The economist said he has also observed a decrease in the export volumes, adding that the fact too, poses a major challenge to the domestic economy.

“Transfers normally decrease during the summer months depending on the development activities our compatriots do abroad, and they tend to increase in October. However, the developments or trends of Russia’s economy today do not inspire hopes for positive expectations; on the contrary, they seem to kind of exacerbate the situation,” he noted.

The exchange rate between the US Dollar and Ruble on Tuesday decreased to 1:34.45. The Central Bank of Armenia’s recent estimates suggest that the private and non-commercial bank transfers from Russia have decreased by 8.7% to $151.6.

Khachatryan said he expects more serious economic challenges and a further devaluation of the Ruble in case the sanctions are really enforced (as a result of bans on Russian bonds in the EU and isolation of the Russian banks from the payment system SWIFT).

“And that means paralyzing the entire Russian financial system in a direct way. Russian specialists themselves predict a further devaluation of the Ruble,” Khachatryan added.

Tatul Manaseryan, another economist whom we contacted for further comments, also agreed that Armenia will incur the impact of the Russia sanctions.

“It is impossible to consider it a temporary phenomenon linked simultaneously to several factors - both economic and political. What naturally raises concerns for us is that the Armenian economy is greatly dependant on both the Russian capital and the money transfers made by employment migrants. Their paces have slowed down, so in this respect, the impact will be great on our economy,” he added.

Asked what possible outcomes he sees, the economist said he knows that the Government has submitted a program which, if followed, may contribute to a double-digit growth.

“We have highlighted the simple steps that will lead to the economy’s development. Very realistic steps may help twice increase Armenia’s export volumes in the 1-1.5 years to come, drastically reducing the unemployment rate. So if an effective use of the human resources is made in the coming couple of years, Armenia may have a surplus [of products],” he said.