Uzbekistan, Tajikistan and Kyrgyzstan are among the largest recipients of remittances from Russia, which makes them especially vulnerable to the Russian economy.
Eurasianet reports that when remittances plunged during Russia’s 2014-2016 downturns, these countries hurt. New data reportedly 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 US$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 US$10.1 billion and 63.3 percent; in 2017, US$12.9 billion and 67 percent).
Eurasianet notes that 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 reportedly higher before Russia’s recent crisis, reaching the equivalent of almost half of GDP in Tajikistan in 2013.
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.
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.
