At a press conference on October 29, Central Bank of Armenia Chairman Martin Galstyan highlighted two primary factors affecting Russia's economic landscape.
The first factor, according to Galstyan, is a significant increase in Russian federal and municipal budget spending, generating substantial demand in specific sectors. The second key factor is the labor market situation in Russia, where a severe labor shortage is driving up wages rather than increasing supply.
“These two phenomena are prompting the Central Bank of Russia to curb demand by raising the key interest rate. They've already raised it by one percentage point twice, bringing it to 21%. It was also noted that this might not be the last hike, and the Central Bank of Russia is prepared to take additional steps to control inflation,” Galstyan emphasized.
When asked about potential impacts on Armenian citizens, Galstyan acknowledged the risk of depreciation in Russia's national currency. However, he also pointed out potential benefits for Armenian exporters: “With inflation in Russia, Armenian producers might have an opportunity to adjust their prices upwards. For instance, if you’re exporting water priced at 10 rubles today, tomorrow it could sell for 12 rubles due to inflation. The question is whether Armenian producers can pass these price increases on to Russian consumers. From an export perspective, inflation works in our favor.”
Regarding purchasing power, Galstyan suggested that the tight Russian labor market will likely lead to further wage increases, which could create additional opportunities for Armenians working predominantly in services and construction.
