Reduced Remittances from Russia: Impact on Georgia’s Economy

In February 2025, the volume of money transfers to Georgia dropped significantly, totaling $252.28 million (711.1 million GEL)—a 5.3% decrease compared to the same period last year. One of the primary reasons behind this decline is the almost halved remittances from Russia, which fell to $30.32 million from $54.82 million a year ago.

Money transfers have long been an essential economic lever for Georgia, particularly for families whose members work abroad and support them financially. A sudden decline in remittances can have short-term negative effects on the economy, especially on household consumption and savings.

Why Are Remittances from Russia Decreasing?

The sharp drop in remittances from Russia is primarily due to:

• Economic and Political Instability: Russia’s ongoing war in Ukraine, international sanctions, and economic isolation have all contributed to a weakened economy.
• Decreased Employment Opportunities: Reduced job availability for migrant workers in Russia.
• Efforts to Reduce Economic Dependence on Russia: Georgia has been actively trying to reduce its reliance on Russian remittances and other economic ties.

Other Sources Filling the Gap

Interestingly, as remittances from Russia decline, other countries are playing a more significant role in filling the gap:

• United States: Georgia’s largest remittance source, with $47.33 million transferred in February 2025.
• Italy: Transferred $44.38 million, making it a crucial contributor to Georgia’s economy.
• Israel: Provided $21.72 million in remittances.

Outward Remittances Also Decreasing

Outbound money transfers from Georgia have also declined. In February 2025, Georgians sent $28.7 million abroad, a 2% decrease compared to last year.
This could indicate:

• Worsening financial conditions for Georgian citizens.
• Cautious spending and saving behaviors among the population.

Potential Economic and Social Implications

Although the decline in remittances is still relatively modest, the trend could have significant economic and social impacts if it continues:

• Reduced Household Income: Many families relying on remittances could face financial difficulties.
• Economic Slowdown: Lower remittance inflows may affect consumer spending, which is a vital part of Georgia’s economy.
• Shift in Economic Strategy: Increased efforts to diversify remittance sources and attract investment from other countries.

To mitigate potential damage, both the government and the population need to assess the situation accurately and develop effective action plans for the near future.
Would you like me to help you come up with specific strategies for Georgia to reduce economic dependence on Russian remittances and improve financial stability?