Transfers of Russians to five neighboring countries soared by almost 2.5 times

Experts explained the reasons for the large-scale leakage of money from the country

Money transfers of individuals from Russia to five countries of the near abroad grew to $24 billion over the year, which is 2.45 times more than the results of the year before last. This calculation was made by RIA Novosti analysts based on open data from the central banks of Armenia, Georgia, Kazakhstan, Kyrgyzstan and Uzbekistan. Why money was “running away” from Russia so actively, moreover, in the direction of our closest neighbors, experts explained to MK.

Uzbekistan became the absolute leader in terms of the amount of transfers for the year: $14.5 billion was transferred to this country from the Russian Federation – 2.6 times more compared to 2021. And in terms of growth rates, Kazakhstan became the leader: transfers to this country from Russia increased more than six times – up to $773 million.

A five-fold increase in transfers from Russia was recorded to Georgia: their amount increased to $2 billion. Remittances to Armenia grew almost as fast: compared to 2021, they quadrupled to $3.6 billion.

As for transfers to Kyrgyzstan, they also grew over the year, although not so noticeably: from $2.69 billion to $2.78 billion.

This statistics could be supplemented by the data of the Central Bank of Azerbaijan, but so far it has published the results only for 9 months of the past year. According to them, transfers from Russia increased 5.5 times, to $2.3 billion.

What caused such a massive flow of funds from individuals from Russia to neighboring countries, will it remain the same large-scale this year, and how will it affect the domestic economy? We asked the experts about this.

Nikita Maslennikov, economist, leading expert of the Center for Political Technologies:

“There are several reasons for such an explosive growth in remittances, 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. 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. There is nothing good for the domestic economy in such processes. When money leaves the economy, this results in at least a stagnation in consumer demand, which has decreased by 5% in 2022. Ultimately, the real disposable income of the population also suffers, as wage funds, in particular, are reduced.”

Igor Nikolaev, Chief Researcher at the Institute of Economics of the Russian Academy of Sciences:

“In conditions of high uncertainty, both geopolitical and economic, citizens will not give up trying to save their money in any possible way. Including – due to transfers abroad. I think that their dynamics in 2023 will be calmer, but the increased level of outflow will continue. A number of citizens will leave for new places “with the ends”, arrange their lives there and, of course, regularly receive financial support from relatives from Russia. In general, when such significant amounts go abroad, the domestic economy loses one of the most important drivers of its development. 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 salaries.”

Sergey Drozdov, independent financial analyst:

“The situation is largely determined by the geopolitical and sanctions reality, all sorts of restrictions on foreign exchange transactions, both from the side of the Central Bank of the Russian Federation and from the Western financial authorities, which are introducing new sanctions. 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 cannot be dispensed with at all. In order for the volume of cross-border transfers to decline, the lifting of sanctions is needed, or, at worst, some kind of relief.”