Russia’s share in money transfers from abroad has declined to 15.3% in July 2024, positioning the country in the third place. The US holds the first place, whereas Italy ranks second. Despite this drop, Russia still remains the leading country over the past seven months with a 18.9% share; however, the gap with the US and Italy is declining.
Russia’s share in money transfers had been gradually decreasing prior to the invasion of Ukraine. Whilst it exceeded 50% in 2013, it fell the 20% mark in 2020. However, the situation drastically changed after the war began.
Graph 1: Russia’s Share in Money Transfers
Source: National Bank of Georgia
The primary factor for Russia’s declining share was the monetary increase in transfers from other countries.
Whilst the total amount of money transfers from Russia to Georgia slightly increased in monetary terms from USD 433 million to USD 457 million, its share changed substantially, declining from 40% to 29% between 2015 and 2018. Furthermore, despite a monetary decline from USD 457 million to USD 411 million, the percentage fell drastically – from 29% to 18% in the subsequent three years.
Russia invaded Ukraine on 24 February 2022. The rise in money transfers from Russia to Georgia was initially observed after a month, starting in April. The drastic depreciation of RUB followed the first wave of sanctions. The Central Bank of Russia imposed strict regulations on external transfers and currency exchange to avoid a complete collapse of the economy. Whilst the first wave of migrants arrived in Georgia quickly, it did not happen in a day. Therefore, the effects of the war impacted transfers in April rather than March.
Some Russian migrants have already left Georgia. Those who stayed purchased real estate in 2022 and 2023. This drop in large expenses further influenced the decline in transfers.
Although transfers decreased in the third quarter of 2022, they peaked in the fourth quarter due to mobilisation. Russia declared partial mobilisation in September 2022, resulting in a new wave of migrants entering Georgia.
Graph 2: Russia’s Share in Money Transfers
Source: National Bank of Georgia
The war extended to Russian territory when Ukraine invaded Kursk in August 2024. This development alone, alongside the mentions of another wave of mobilisation, could lead to a new wave of Russian migrants arriving in Georgia, subsequently affecting transfers. Even ten days following the changes on the warfront, it is impossible to make definitive claims as the situation depends on the territory where the war continues, potential mobilisation and border closure.
The National Bank of Georgia does not record the citizenship of transfer recipients, thus making it impossible to differentiate between Russian and Georgian recipients for Russian transfers.
Whilst money transfers do not directly participate in forming the gross domestic product (GDP), it significantly impacts one of its key components – consumption.
Excluding certain exceptions, reliance on transfers has been steadily increasing in the past 20 years. The share of transfers in the total economy constituted 6.2% in 2003, 10.7% in 2012 and 15.6% in 2022. This ratio reached a record high in 2021 even before the war, reaching 14.2%.
The negative net migration exceeded 285,000 from 2013 to 2023. The migration processes increased rapidly in recent times. Over 118,000 Georgian citizens left the country from 2022 to 2023 as compared to those who returned. This high rate of migration has accelerated the growth in money transfers; however, it should also be noted that transfers also increased in 2020 when there was a positive net migration due to the pandemic.
The volume of transfers from the US has significantly increased recently. Transfers from the US to Georgia has reached USD 317 million in the first seven months of the current year, more than double as compared to the figure of the same period in 2021. Furthermore, the volume of transfers from the European Union is steadily increasing. The aggregate share of transfers from the USA, the EU member states and Great Britain exceeds 60%.
