Skip to main content

Eurasianet

Main Menu

  • Regions
  • Topics
  • Media
  • About
  • Search
  • Newsletter
  • русский
  • Support us
X

Caucasus

Armenia
Azerbaijan
Georgia

Central Asia

Kazakhstan
Kyrgyzstan
Tajikistan
Turkmenistan
Uzbekistan

Conflict Zones

Abkhazia
Nagorno Karabakh
South Ossetia

Eastern Europe

Belarus
Moldova
Russia
The Baltics
Ukraine

Eurasian Fringe

Afghanistan
China
EU
Iran
Mongolia
Turkey
United Kingdom
United States
X

Environment

Economy

Politics

Kazakhstan's Bloody January 2022
Kyrgyzstan 2020 unrest

Security

Society

American diplomats in Central Asia
Arts and Culture
Coronavirus
Student spotlight
X

Visual Stories

Podcast
Video

Blogs

Tamada Tales
The Bug Pit

Podcasts

EurasiaChat
Expert Opinions
The Central Asianist
X
You can search using keywords to narrow down the list.
Russia, Kyrgyzstan, Uzbekistan, Tajikistan

Russian remittances to Central Asia rise again

When Russia hurts, Central Asians feel the pain. Are remittances a boon or a bane?

Sam Bhutia May 23, 2019
Migrants in Russia with exchange rate sign Especially vulnerable (photo: David Trilling)

Uzbekistan, Tajikistan and Kyrgyzstan are typically among the largest recipients of remittances from Russia, which makes them especially vulnerable to the Russian economy. When remittances plunged during Russia’s 2014-2016 downturn, these countries hurt. New data show that after a strong resurgence in 2017, remittances continued to rise in 2018.

According to data from the Central Bank of Russia, of the $13.99 billion in personal remittances sent from Russia to other members of the Commonwealth of Independent States (CIS) in 2018, about 68.1 percent went to these three countries. (By comparison, in 2016 the figures were $10.1 billion and 63.3 percent; in 2017, $12.9 billion and 67 percent.)

Remittances from Russia to CIS

Kyrgyzstan and Tajikistan are particularly dependent since the moribund economies offer few domestic jobs, forcing hundreds of thousands to seek work abroad. Russia offers these workers seasonal employment, usually in the construction sector.

The scale of Kyrgyzstan and Tajikistan’s dependence on Russian remittances is clear when the sums are compared to the overall economy – 31.3 percent of GDP for Tajikistan and 32.9 percent for Kyrgyzstan, according to World Bank data. The figure was higher before Russia’s recent crisis, reaching the equivalent of almost half of GDP in Tajikistan in 2013.

top remittance dependent countries

This makes these countries some of the most remittance-dependent nations in the world: any economic downturn in the source country translates into an economic slump in the recipient country as well.

This was the case when the Russian economy crashed. Russia’s GDP contracted 2.3 percent in 2015, so Kyrgyzstan’s and Tajikistan’s economies slumped as well (this was also compounded by the important role Russia plays as a trading partner for these countries).

Russian remittances to Central Asia

Though remittances do not factor directly into GDP calculations, remittances are a key source of household income in Kyrgyzstan and Tajikistan, especially in rural areas. Remittances help reduce poverty and ease credit constraints for poor households and local businesses. However, remittances can also foster a culture of dependence and reduce labor supply by encouraging local workers to head abroad.

At a macro level, moreover, remittance inflows can impact the exchange rate through a Dutch disease-like phenomenon, putting appreciatory pressure on the local currency and making a country’s exports more expensive on global markets. Research suggests that remittances usually lead to an increase in household consumption that is biased toward non-tradable goods and ultimately leads to currency appreciation. In both Tajikistan and Kyrgyzstan, this Dutch-disease effect is compounded by the fact that the export basket is dominated by commodities such as gold and silver.

Sam Bhutia is a country analyst covering Central Asia and South Caucasus at The Economist Intelligence Unit. Sign up for Eurasianet's free weekly newsletter.

Sam Bhutia is an economist specializing in the former Soviet Union.

Sign up for Eurasianet's free weekly newsletter. Support Eurasianet: Help keep our journalism open to all, and influenced by none.

Related

Uzbekistan: Ex-police officer convicted over Nukus events dies 
Georgia faces U.S. and European pressure on Russia flights
Georgian authorities face backlash over Russian purchases

Popular

Uzbekistan: Ex-police officer convicted over Nukus events dies 
Georgia faces U.S. and European pressure on Russia flights
Joshua Kucera
Kazakhstan: Swathes of land confiscated from Nazarbayev’s brother ahead of vote

Eurasianet

  • About
  • Team
  • Contribute
  • Republishing
  • Privacy Policy
  • Corrections
  • Contact
Eurasianet © 2023