Economies of Armenia and Georgia Grew After Influx of Russians

The economies of Armenia and Georgia, which are among the most popular destinations for relocation among Russians, recorded significant growth in 2022, according to S&P Global Ratings. This was reported by RTVI.

In the first half of 2022, GDP in Georgia and Armenia grew by 10.3% and 13.1% respectively, significantly surpassing the market expectations at the beginning of the year. This growth, according to S&P analysts, was driven by an increase in domestic demand due to the mass inflow of Russian consumers.

At the same time, the balance of payments of Georgia and Armenia has improved amid a multiple increase in remittances from Russia. In countries chosen for relocation by Russians, according to the S&P Global Ratings report, the impact of transfer increases has not been as noticeable. For example, in Uzbekistan and Kazakhstan, whose economies are quite large, such transfers do not play a significant role. To compare, remittances account for 1% of Kazakhstan's GDP and 25% in Tajikistan.

Moreover, the influx of Russians has also strengthened the national currencies of the countries along the relocation routes. For instance, the Georgian lari and the Armenian dram, which weakened significantly in early March, appreciated by approximately 20% and 30% respectively against the dollar.

This substantial strengthening has positioned the countries of Central Asia and the Caucasus as leaders in the emerging market segment concerning currency growth.

Previously, Oxford Economics had provided its assessment of the impact of the massive migration of Russians to the countries they are relocating to. Analysts concluded that in the short term, migrants could lead to an increase in prices for goods, food, and housing in host countries, while in the long term, they could contribute to economic growth.

"The countries that host fleeing Russians will receive an injection of human capital, which will boost their long-term growth rates," the Oxford Economics report stated.