Value of money transfers from migrants workers in Russia down 26% last year – report

Russian President Vladimir Putin
Russian President Vladimir Putin

The value of currency transfers from migrants workers in Russia to neighbouring countries dropped by a quarter last year as western sanctions and the crude price rout hit the country’s economy, a new report said.

The Caucasus, Central Asia and Eastern Europe supply the vast majority of migrant labour to Russia, and many workers from these regions transfer part of their wages to their families back home.

To varying degrees, these funds are important for the economies of the states where the money ends up.

According to the US Energy Information Administration’s study, the share of remittance as measured against GDP in Tajikistan was 33% last year, but only 3% in Azerbaijan, which has a developed oil and gas business of its own.

All told, Armenia, Azerbaijan, Georgia, Kyrgyzstan, Tajikistan, Ukraine, and Uzbekistan all received at least 50% of their remittances from Russia last year, but their total value was $800million (£600million) lower than in 2014.

The economic slowdown in Russia, characterised by five consecutive quarters of decline in GDP, has reduced opportunities to work and earn money.

Meanwhile, the collapse in the value of the rouble – down 59% against the dollar from 2014 to 2015 − has also taken a chunk out of the value of pay sent abroad.

Such large shifts in the value of these money transfers directly impacts economic activity in these neighbouring states.

For example, oil consumption across the seven countries grew by about 18% in 2014 and then declined by about 1% in 2015.

And GDP growth in the Caucasus and Central Asia in 2016 is projected to be the lowest in two decades.

Russia’s economy is still projected to contract in 2016, although at a lower rate of -1%, according to Oxford Economics, but with oil prices and the rouble showing signs of stabilising, these countries will be hoping for an upturn in remittances to boost their economies.