The World Bank reveals a notable shift in the remittance landscape of the Europe and Central Asia (CA) region, as per the KNOMAD's report. Following robust growth rates of 15.5% in 2021 and 18.5% in 2022, remittance flows are anticipated to decrease by 1.4% in 2023, amounting to approximately $78bn. Despite this decline, the remittance volumes remain considerably elevated compared to the pre-invasion levels in Ukraine.
The primary factor contributing to the weakened performance this year is the deceleration in remittances from Russia to neighboring countries. Nations such as Armenia, Azerbaijan, Georgia, Kyrgyzstan, and Uzbekistan, which traditionally received substantial remittance volumes from Russia, are witnessing an adjustment from high volumes to a gradual decrease.
Specifically, Uzbekistan, the largest remittance recipient in the CA region, is projected to experience a decline in remittance flows from $16.7bn (approximately 21% of GDP) in 2022 to $16.1bn (about 18% of GDP) in 2023.
The reduction in remittances can be attributed to several factors, including a slowdown in remittances from Russia due to a decline in the number of Uzbek labor migrants in Russian regions. Additionally, factors such as rising inflation in Russia and the appreciation of the Uzbek soum against the Russian ruble contribute to the overall decrease in remittance volumes.
Despite the anticipated decline, remittances from Russia to Uzbekistan in 2023 are still notably higher than pre-war levels in Ukraine observed in 2020–2021. Russia maintains its position as the primary source of remittances to Uzbekistan, constituting around 80% of the total remittances to the country. This is a significant shift compared to 2019–2021 when remittances from Russia accounted for approximately half of the total remittances to Uzbekistan.
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