Named the reasons for the sharp increase in remittances from Russians abroad

Relocation and sanctions are to blame for everything

In 2022, money transfers from Russia to neighboring countries grew exponentially, by hundreds of percent. We are talking about Kazakhstan, Georgia, Uzbekistan, Armenia and Kyrgyzstan, where individuals transferred a total of more than $ 22 billion. Of course, this does not benefit the domestic economy and the population: capital flight abroad leads not only to stagnation of consumer demand, but also contributes to significant contribution to the slowdown in GDP growth and real incomes of Russians.

Last year, Uzbekistan turned out to be the undisputed leader in terms of the volume of transfers from the Russian Federation: $14.5 billion was sent to this Central Asian republic, which is 2.6 times more than in 2021. In the local Central Bank, this is associated with two circumstances – a significant strengthening of the Russian ruble against the dollar and the transition of labor migrants to official channels for sending money as a result of currency restrictions in the Russian Federation. $775.4 million went to Kazakhstan (6.8 times more than in 2021), about $2 billion (5 times) to Georgia, $3.1 billion (4 times) to Armenia, $2.6 to Kyrgyzstan billion (only 6% more).

There are several reasons for this explosive growth, but the main one is the mass exodus of Russians from the country in the spring and autumn of 2022. Of course, not for the purpose of tourist recreation, but for the sake of long-term or permanent relocation. According to the FSB, from July to September, the number of trips abroad (mainly to visa-free CIS countries: Kazakhstan, Armenia, Kyrgyzstan, Tajikistan) amounted to 9.7 million, which is 1.2 million more than in the same period in 2021. The statistics of cross-border transfers could also be affected by the service that has gained popularity for the purchase abroad of those goods that were not available in Russia due to sanctions. In this case, the money was sent to the cards of intermediaries.

“When money leaves the economy, it turns into at least a stagnation of consumer demand, which in 2022 decreased by 5%,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – The role of this factor is still difficult to assess thoroughly, and although it is not decisive, it still has a negative impact on the dynamics of GDP. Ultimately, the real disposable income of the population also suffers, as wage funds, in particular, are reduced.”

Of course, not only Russians sent money abroad, but also labor migrants. But the statistics regarding the latter have not changed for years, and 2022 was no exception. The sharp surge is connected precisely with the activity of domestic relocators. According to Maslennikov, this year the migration outflow from the country will continue, although it will be less than in 2022. Whether some of these people will return to Russia is hard to say. It is clear that if they are constantly threatened with confiscation of property from here, there can be no question of returning. Moreover, relatives will start sending them even more money.

“The situation is largely determined by the geopolitical and sanctions reality, all kinds of restrictions on foreign exchange transactions, both internal (by the Central Bank) and external (by Western financial authorities), — says financial analyst Sergei Drozdov. — There is simply no point in keeping dollars and euros in Russian banks today because of the large commissions. It is better to transfer them to the banks of “friendly” countries, having previously acquired local plastic cards. And in the case of the relocation of the owners themselves, this is indispensable. In order for the volume of cross-border transfers to decline, the lifting of sanctions is needed, or, at worst, some kind of relief.”

When such significant amounts go abroad, the domestic economy loses one of the most important drivers of its development, argues Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. This money could be spent on the purchase of goods and services within the country, they would warm up consumer demand and create an additional incentive for production. The budget would be replenished with new revenues, employers would have the resources to increase wages

“In conditions of high uncertainty, both geopolitical and economic, citizens will not give up trying to save their money in any possible way. including through transfers abroad, — says the economist. — Their dynamics in 2023 will be calmer, but the increased level of outflow will remain. A number of citizens will leave for new places “to make ends meet”, arrange their lives there and, of course, regularly receive financial support from relatives from Russia.”