World Bank: remittances from Russia surge 53%

PanARMENIAN.Net - The World Bank’s latest monthly report highlights accelerated economic activity, a sharp rise in remittances from Russia, and inflation reaching 3.8 percent in January, largely due to food price increases.

The World Bank has published its monthly summary of Armenia’s economic developments, outlining key macroeconomic trends.

In December, economic activity growth accelerated to 14.4 percent year-on-year, bringing annual growth to 9.2 percent. Net non-commercial remittances from Russia continued to expand, increasing annual net inflows by 53 percent year-on-year.

In January, inflation rose to 3.8 percent, mainly driven by higher food prices.

In 2025, exports and imports declined due to the phased suspension of re-exports of precious stones and metals, marking the first annual drop in trade since 2020. The same year recorded a budget deficit equivalent to 3.8 percent of GDP, as projected.

In December, economic activity growth sharply accelerated to 14.4 percent year-on-year, up from 11.5 percent in November. Industry and construction remained the main drivers.

Industrial output expanded by 38.6 percent year-on-year, fueled by a 43.3 percent increase in manufacturing—primarily basic metals production—and a 34.9 percent rise in mining. Electricity and energy production grew by 13 percent year-on-year after two months of stagnation. Construction activity continued to expand, reaching 20.5 percent year-on-year.

Growth in services excluding trade slowed to 8.2 percent year-on-year from 11.2 percent in the previous month. Wholesale and retail trade growth doubled to 3.2 percent year-on-year, compared to 1.5 percent in November.

Economic growth in 2025 reached 9.2 percent year-on-year, exceeding both 2024 figures and initial projections. The number of registered businesses increased by 6.3 percent year-on-year, largely driven by sole proprietors.

In December, net non-commercial remittances rose by 14.2 percent year-on-year. This was driven by a 37.7 percent increase in inflows from Russia, accounting for 52 percent of the total, and a 9.4 percent rise in transfers from the United States. In 2025, total net inflows amounted to 714 million U.S. dollars, up 53.5 percent from the previous year, indicating a recovery trend after the 2024 decline, though still below the 880 million U.S. dollars recorded in 2023.

Inflation in January reached 3.8 percent year-on-year. About two-thirds of the increase stemmed from a 5.9 percent rise in food and non-alcoholic beverage prices. The remainder was driven by price increases in alcoholic beverages (9 percent), healthcare (3 percent), transport (4.3 percent), and education (8.3 percent).

At its February 3 meeting, the Central Bank of Armenia left the refinancing rate unchanged at 6.50 percent.

In December, exports and imports continued to grow, marking only the second positive month in 2025. Exports rose by 34.3 percent year-on-year, while imports increased by 30.4 percent year-on-year, mainly due to higher trade volumes in precious and semi-precious stones and metals, up 43.2 percent and 56.6 percent respectively. However, December 2025 exports of these goods were 50.2 percent lower than the peak recorded in December 2023.

Significant growth was also recorded in exports of prepared food products (70.8 percent year-on-year) and mineral products (62 percent year-on-year), increasing their share in total exports from 21 percent to 26 percent.

On a cumulative basis, 2025 exports declined by 36.1 percent year-on-year and imports by 23.6 percent year-on-year, marking the first annual contraction since 2020. Excluding precious metals and stones, exports grew by 8.9 percent year-on-year and imports by 7.5 percent year-on-year.

After a 4.1 percent decline in the first half of the year, tourist arrivals increased by 7.5 percent year-on-year in the second half, resulting in annual growth of 2.5 percent, with 41 percent of visitors arriving from Russia.

In January, the Armenian dram appreciated by 0.4 percent month-on-month against the U.S. dollar and the euro. On an annual basis, the dram strengthened by 4.5 percent against the U.S. dollar but depreciated by 8.1 percent against the euro and 24.2 percent against the ruble.

Gross international reserves increased by around 100 million U.S. dollars to 5.2 billion, equivalent to 4.1 months of import coverage.

In December, commercial bank deposits rose by 5.6 percent month-on-month, while lending increased by 2.6 percent month-on-month. Adjusted for exchange rate effects, annual growth reached 17 percent for total deposits and 25.2 percent for loans. Financial system indicators remained stable, with capital adequacy at 20.7 percent and non-performing loans at 1.3 percent.

In December, the budget deficit amounted to 1.4 percent of estimated annual GDP, bringing the total 2025 deficit to 3.8 percent, below the planned annual level. Total revenues and grants declined by 1.1 percent year-on-year due to a 66 percent drop in other revenues. At the same time, tax revenues increased by 17.3 percent, driven by VAT, personal income tax, and corporate income tax, while environmental taxes fell by 17.2 percent.

Total expenditures rose by 1.5 percent year-on-year. Current spending increased by 7.1 percent, including a 15.5 percent rise in wages and a 24.3 percent increase in transfers. Capital expenditures declined by 7.7 percent, reflecting an 18.7 percent drop in defense spending and a high base effect from the previous year, while capital spending on education rose by 35.5 percent.

In 2025, total revenues grew by 11.9 percent and total expenditures by 11.8 percent, resulting in a budget deficit equivalent to 3.8 percent of annual GDP, slightly higher than the 3.6 percent recorded in 2024.