Wages Market Cools in Armenia, Says Central Bank President

The consumption of goods and services by foreigners in Armenia has reportedly started to decline, according to preliminary observations. This was stated today by the President of the Central Bank of Armenia, Martin Galstyan, during a meeting with journalists.

He noted that there has been no comprehensive assessment of the number of Russian relocants recently, making it unclear who stays and for how long based solely on official arrival and departure data.

In the case of Indian citizens, it’s difficult to ascertain the exact numbers; some sources claim their figure has decreased from 16,000 to 11,000, while others suggest a reduction from 50,000 to 30,000. Regardless of the decline’s impact on the labor market, its effects remain unclear, as it’s unknown how many are students, businesspeople, or wage workers.

Based on these data, the Central Bank president concluded that the number of foreign citizens in Armenia has decreased, implying a drop in demand for goods and services, particularly in public catering, recreation, and entertainment sectors. This reduced demand has also led to a decrease in wages in these areas.

During 2022-23, with the influx of relocants and their impact on demand, wages in these sectors increased significantly (by 20-25%), outpacing price increases (which were around 6-7%). This has affected the country’s overall inflation rate. As of August 2024, inflation in the services sector stands at 3%, while wage growth is at 5.9%. Consequently, the 'overheating' in the labor market is decreasing.

Nonetheless, the central bank notes that economic activity in the country continues to remain higher than the potential GDP growth rate (based on data from the third quarter of 2024). Therefore, according to Galstyan, if government measures aimed at stimulating the economy are large-scale, they could bear inflation risks.