How money transfers of Russia impact macroeconomic indicators of Azerbaijan?

By Trend

The reduction of money transfers from Russia will have an insignificant impact on the macroeconomic indicators of Azerbaijan, Head of the South Caucasus political science club Ilgar Velizade, told Trend.

The indicator of remittances in Azerbaijan's gross domestic product (GDP) occupies an absolutely small share and its impact on macroeconomic indicators will be minimal, he noted.

"About 650,000 Azerbaijanis live in Russia according to official data. Larger amount of our compatriots go to Russia for seasonal work. Volume of their money transfers to Azerbaijan ranged from $500 million to $1 billion yearly in the previous 2-3 years. This figure was about $450 million for 2020," Velizade said.

Russia has already set a limit for individuals to make transfers abroad up to $5,000 per month per person, the expert added.

"Remittances will decline significantly. Decline in solvency also will be noted in Russia. The sanctions imposed on Russia have obvious goals and consequences," Valizade noted.

He said the reduction is expected in those sectors where foreign capital was present, GDP will also decrease by seven percent (according to international organizations), also economic activity, which will lead to a reduction in the domestic market and will limit the interaction of domestic market entities with foreign partners.

All this will lead to a reduction in the income of Russia's population and the countries whose citizens make up a significant part of labor migrants will suffer the most from the reduction in remittances.

"These are, first of all, representatives of Uzbekistan, Tajikistan, Kyrgyzstan, Armenia," Velizade said.