Russians transfer almost $30bn abroad

The amount of cross-border transfers has decreased in Russia, but natural persons’ transfers to “far-abroad” countries have increased

Russians transfer almost $30bn abroad
Photo: zaim.com

Natural persons’ transfers from Russia have decreased if we measure them in dollars. As Realnoe Vremya calculated, the amount of money transferred abroad in three quarters has been $29,2bn, while a year ago the number was $30,5bn. The coronavirus pandemic also made its contribution to this or, more precisely, the tendencies that outlined in cross-border transfers as early as in spring continued at the end of the summer and in early autumn. According to this data, it seems that it has become much harder for labour migrants to keep their families — they have to receive helpe from abroad. However, Russians have augmented the amount of transfers to “far-abroad” countries to $7bn, mostly traditionally to Switzerland.

Tough for migrants

A tendency for a reducing amount of cross-border transfers in Russia has continued in the third quarter of the year. Analysts say this happens because of the general decrease of international economic activity, people’s desire to “save” money by not transferring it to other countries amid the uncertainty because of the pandemic.

If we compare the third quarter of 2020 with the same period in 2019, a reduction in activity in the market of cross-border transfers regarding both sent and received transfers will turn out noticeable. Transactions from Russia abroad, for instance, have decreased by 2% from $10,5bn to $10,4bn. Moreover, this is caused by a 13% reduction in transactions to CIS countries. In contrast, people have started to transfer more money to “far-abroad” countries, $7 against $6,7bn (+5%).

However, there is an interesting tendency in transactions to Russia. The transfers have generally dropped from $6,6bn to $6 by 8%, but here the decrease is conditioned by “far-abroad” countries: transactions from there have plunged by 11%, while the amount of money sent from CIS countries has risen by 14%. It feels like residents of former Soviet republics have begun to support their relatives in Russia. Perhaps, we are talking about help to labour migrants who didn’t manage to go home. Financial analysts partly confirm this too.

“We live in the era of quarantine measures, so the activity of migration of labour resources has gone down. This might have influenced certain moments when it comes to cross-border transfers: if labour migrants have begun to earn less in Russia, they have started to send less money to the countries they came from. There is a reverse tendency too: they have to receive help from abroad. The economic activity won’t probably bounce back, such a tendency will exist,” thinks Director of ACRA group of ratings of financial institutions Valery Piven.

Senior analyst of Alpari Anna Bodrova has an analogous opinion too:

“The amounts of reduced transfers from Russia to CIS countries are clear enough. The number has likely decreased by 15-17% in the fourth quarter of 2020, the expectations of the first quarter of 2021 are quite sad. There are more incoming transactions: parents help their children who left when the borders closed. The main explanation for what’s happening is the rapid reduction of the number of labour migrants. Considering the decision of Russian authorities here, we can say it will get only worse.”

Rise in social benefits and refusal of investment in debts

In general the pattern of cross-border transactions hasn’t changed dramatically except for some moments. The main goal of transactions both to Russia and from the country is a transfer of one’s own money, that’s to say, transaction to one’s own account (or close relative’s account) in another country. Here the numbers have grown, moreover, in both outgoing and incoming transfers. By 11,5% more money has been transferred to Russia compared to 2019, the rise in transfers from Russia is 9,6%. We should note that the total sum of transfers is $1,6bn in case of incoming transfers and $3,6bn in case of outgoing transfers.

A tendency for growth of another important category of transfers is also noticeable — non-refundable transfers and money received. 5% more money has started to be sent to Russia, the amount sent from Russia is nearly 30% more. The total sum here is 799m and $1,13bn, respectively. This category includes a very long list of transfers — it is grants, donation, scholarship and pensions. This growth can probably be explained by social payments (for instance, payout for children) both from Russian authorities and authorities of other countries.

Interestingly, by the way, transfers of salaries to Russia have increased by 14%, they have reached $588m, this is perhaps also a supporting measure for people. Transfers of electronic money have also increased by 10%, to $550m in case of incoming transfers, while outgoing transfers have decreased by 9%.

Also, we can note the following tendencies: the number of transactions from the country in the Forex has increased by 79% at once, from $52 to $93m. While loans in Russia have collapsed: transfers here have gone down from $537 to $143 million, repayment of debts in other countries, in contrast, has significantly risen — from $40 to $90 million — people don’t try to accumulate debts, the next weakening of the ruble explains it.

Valery Piven from ACRA says that amid a slower economic activity the circulation of money between counteragents is slower:

“No economic activity, no payments and transfers. In general, considering that further quarantine measures aren’t excluded, both businesses and citizens should have a cushion, which also influences the amount of cross-border transfers,” the expert explained.

Swiss stability and fears because of the USA

If we consider the main countries that transfer money to Russia, it will expectedly turn out that the flow of money from most of them has decreased. For instance, the ex-leader in transfers — the USA — has lowered the indicator more than twice during the year — to $579m. Transfers from Latvia have considerably reduced, by a third, to $360m. The influx of money from Cyprus has gone down by almost a quarter, to $202m.

But there are reverse situations too. For instance, Switzerland has taken the lead in transfers to Russia — the amount of transfers has approximately increased by a quarter, to $1,38bn. A rise in transfers is also reported from the United Arab Emirates (by 19%, to $105m), Israel (by 41%, to $100m), by 55% more money has been received from Austria — $132m.

Among CIS countries, the number of transfers increased from Kazakhstan — by 10% (to $389m), Armenia (by 32%, to $99m), Ukraine (1,5 times more than a year ago, $86m). An upsurge of transfers from Belarus is also notable — 2,1 times — from $47 to $101m.

Outgoing transfers from Russia have notably grown to Switzerland (by 41%, to $1,58bn), Great Britain (almost by a quarter, to $686m). Big growth is also notable in transfers to Monaco, more than 2,5 times, to $486m. A rise in transfers to Ukraine only is notable among CIS countries — by 30%, to $126m.

Samara Oblast doesn’t care about anything, while money escapes from Saratov Oblast

If we consider cross-border transfers in regions of Volga Federal Okrug, only Samara Oblast has a steady positive result with growth. It is also a leader in the total amount of transfers, $45,6m have been sent to this region from abroad in the third quarter (by 31% more than a year ago). While $60,8m has been transferred from the region, by 29% more than a year ago.

Only Tatarstan has a bigger amount of transfers to the region. Here the number has been $27,5m, which is by 56% more than a year ago. But by 6% less money has been sent from the region, the number a year ago was $38,4m. Both indicators decreased in the third region with the biggest amount of transfers, Nizhny Novgorod Oblast — by 14% (to $27m) in case of incoming transfers and by 41% (to $27,3m) in case of outgoing transfers.

We should note Kirov Oblast among other regions with a fall. Here the amount of incoming cross-border transfers has fallen five times — from $10 to $2,1m. As for growth, three regions can be mentioned — Mordovia, Ulyanovsk and Saratov Oblasts. However, in all the cases, we are talking about the growth of transfers from the region — here the indicators have risen 2,4, 2,5 and 2,7 times.

By Maksim Matveyev, Realnoe Vremya’s analytic staff