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Armenian Remittances Rise In 2010

A statue symbolizing the national currency, the dram, outside the Central Bank building in Yerevan.
A statue symbolizing the national currency, the dram, outside the Central Bank building in Yerevan.
YEREVAN -- Following a sharp fall caused by the global recession, large-scale cash remittances from Armenians working abroad rose by about 10 percent in the first half of this year, contributing to Armenia's ongoing economic recovery, RFE/RL's Armenian Service reports.

Data from the Armenian Central Bank put the total amount of incoming noncommercial wire transfers processed by local banks at almost $490 million, up from $447 million recorded in the same period last year.

The overall amount of cash inflows, including funding for business transactions, rose by only 3 percent, to $617 million. It was equivalent to 16.7 percent of the country's first-half Gross Domestic Product.

Both commercial and noncommercial remittances, which benefit a considerable part of the country's population, tumbled by roughly 30 percent last year due to the economic downturn around the world and particularly in Russia.

That was considered one of the factors behind a double-digit contraction of the Armenian economy registered in 2009. Official statistics show the economy expanding by 6.7 percent in the first half of 2010.

Russia, which is home to most of the hundreds of thousands of Armenian migrant workers abroad, accounted for more than 70 percent of the cash sent by them to Armenia from January-June.

The United States, which also has a sizable Armenian community, remained the second-largest source of the remittances, contributing about 7 percent of the total.

The remittances not only boost consumer spending but also enable Armenia to run massive trade and current-account deficits. Their renewed growth was accompanied by a deepening of the country's trade imbalance.

According to the National Statistical Service (NSS), the first-half trade deficit increased by 15.5 percent to $1.28 billion despite a 56 percent surge in Armenian exports. It was more than offset by a 24 percent rise in imports, totalling $1.72 billion.

Rising hard-currency inflows, which accelerated after the first quarter of 2010, appear to have also contributed to a renewed appreciation of the national currency, the dram. It has gained more than 6 percent in nominal value against the U.S. dollar since April.