Armenia turns out to be greatest beneficiary of ongoing war in Ukraine

Thanks to the massive influx of Russians, the GDP of Georgia and Armenia can grow at double-digit rates this year, and the Georgian lari and Armenian dram from the lows of 2022 have already strengthened by 20% and 30%, respectively.

Forbes magazine reports on the findings of an assessment conducted by Renaissance Capital on the Armenian economy post-February 24. Armenia has become the main beneficiary of the relocation of Russians due to the conflict in Ukraine with analysts predicting that the country's GDP growth this year will reach 14%, although at the beginning only 5% were  expected. 

According to the report, one of the biggest reasons for the boost to the economy is an increase in remittances from Russia, which supported the balance of payments of Armenia, as well as an increase in domestic demand due to a massive influx of people. In July-September alone, Russians entered Armenia just over 267,300 times.

"We see that the IT sector is not so large in terms of GDP, but the state contributes to the localization of relocating specialists or IT business, which plays into the hands of the country's economy. In this sector, we will see strong double-digit growth," said Sofia Donets, Chief Economist for Russia and the CIS at Renaissance Capital.

"The hotel sector, the restaurant sector, the service sector and trade to the current moment show an increase of up to 30%According to Renaissance Capital, in the first nine months of 2022, exports grew by 60%, mainly due to the flow to Russia. "Armenia does not violate the sanctions regime, but nevertheless a restructuring of logistics was initiated. Russia is one of the key trade partners for Armenia," Donets explains.

Armenia is "starved" for visitors, Donets believes. "In recent years, the service sector has been underutilized due to the pandemic. The tourist flow has recovered to pre-pandemic levels, which was also influenced by the influx of Russian tourists, who were limited in their choice this year, "the expert shares.