Armenia’s Financial Stability Depends to a Large Extent on Remittances from Russia

4 july 2017

The main topics covered in the Global Economy Development bulletin published by Analytical Center experts are the economic growth prospects in Armenia and the issue of greenhouse gas emissions.

Armenia has found itself in a difficult geopolitical situation, and it does not have significant amounts of hydrocarbon resources. The 2008-2009 global financial crisis caused the country’s GDP to plummet, with the construction sector suffering the most. “The stability of Armenia’s economy in financial terms depends to a large extent on remittances from the diaspora, especially in Russia, which exceed 15% of the country’s GDP. And that to a large extent determines the fluctuations in imports, retail and other parameters,” the analysts write. According to them, 2015-2016 clearly demonstrated the difficulties in keeping active an economy that depends so much on remittances from abroad: the devaluation of the Russian Ruble drastically reduced the amount of financial resources flowing into the country, causing problems in a number of sectors of the Armenian economy. While exports remained the same both imports and production fell. The sustainability of Armenia’s economic growth depends also on energy supply where nuclear power and imports of Russian natural gas play a key role. Future economic growth is going to depend on the high level of the human capital which the country has amassed, on small and medium sized businesses as well as on the development of economic ties within the Eurasian Economic Union, the experts believe.

As for greenhouse gas emissions, their total amount in the world reached 33.4 million tons of CO2 equivalent in 2016, an amount that is just 0.6% higher than in 2013, which the experts believe is quite an achievement. However, even if all emissions stopped now, the average temperature on the planet would still continue to rise for decades to come because of all the CO2 and other greenhouse gases that have already accumulated in the atmosphere. That is their principal difference from water vapor, which, despite being emitted into the atmosphere in huge amounts, does not stay there for long and thus does not have the same effect.

The analysts believe emissions in the developing countries are rising fast (especially in India), remaining unchanged in Japan, Russia and Europe, and falling in the US (as the country is moving to natural gas). China, the global leader in terms of emissions, managed to reduce them somewhat in 2015-2016. However, climate change still remains a serious problem, and the 2015 Paris climate change agreement is going to be hard to abide by, especially now after the US President Donald Trump announced June 1, 2017 that his country would be pulling out of it.

For more information, see the bulletin In Focus: Armenia - Problems and Growth Prospects. Taking the Pulse: Greenhouse Gas Emissions in 2016.

Other bulletins on current global economic trends can be found in Publications.

Photo from open sources