Georgia: Remittances on a steady downpath

CAUCASUS / CENTRAL ASIA - In Brief 25 Jul 2023 by Ivan Tchakarov

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In June, net monetary inflows inched down to US$324mn. This is slightly down on the US$357mn print in May, but significantly off the peak of US$500mn peak recorded in Dec 2022 (Graph 1). At the same time, net monetary inflows continue to run at levels that are about twice the pre-2022 pace. Graph 1 Net monetary inflows into Georgia are on a steady downpath Source: Statistical Authorities of Georgia, Author’s calculations Inflows from Russia still account for much of the observed variation of the data, but their importance declines. Inflows from Russia amounted to US$129mn, down from the US$317mn peak in Dec last year (Graph 2). This is still a significant 37 percent of total inflows, although the Russian share was about 60 percent towards the end of the last year (Graph 3). This still represents a much bigger share relative to the 12 percent contribution seen at the start of 2022. Graph 2 Transfers from Russia continue to dominate Source: Statistical Authorities of Georgia, Author’s calculations Graph 3 Share of inflows originating in Russia represents about 40 percent of total monetary transfers Source: Statistical Authorities of Georgia, Author’s calculations Net monetary inflows exhibit a certain habit persistence, which has positive implications for growth and the current account. As we have argued in detail here and here, the more sluggish pace of the decline in net remittances relative to the rest of the CCA economies has some important supporting implications for GDP growth and the CA in Georgia. There is some evidence, for example, that while Armenia may be used only as a hub for sending Russia-related money to other final destinations, such Russia-related infl...