Page 26 - GEORptAug20

5.1.3​ Capital flows
Remittances to Georgia up 17.8% y/y in June
The volume of money transfers (gross remittances) to Georgian households rose by 17.8% y/y to $169.2mn in June 2020, as they recovered quickly after the slowdown in March-May. Some post-lockdown catch-up effect might have contributed to the robust remittances in June.
Net remittances in June were $147.2mn, up 16.8% y/y. For the whole January-June period, the net remittances contracted by only 4.9% y/y to $662mn. Assuming the worst is over in terms of the coronavirus (COVID-19) pandemic, the full-year remittances might recover to last year’s level. This will have a positive effect on the balance of payments (BoP) stability, particularly in the context of the shrinking trade deficit that contracted by -17.2% y/y in January-June, to a still impressive $2bn.
Gross remittances were 4.6% smaller than last year, $769.0mn in January-June, for the period.
The net remittances covered 37.2% of Georgia’s trade gap (goods) in the first half of the year, which is a better coverage ratio compared to 32.3% in the same period last year.
However, the revenues from tourism, which typically offset the biggest part of the trade gap in the country’s BoP have contracted much more strongly and the outlook remains grim.
As regards the source of remittances to Georgian households in January-June, in net terms, Italy accounted for 19% (up from 16% in the same period last year), followed by Russia (17% down from 23% last year) and Greece (14%, up from 13%). Remittances from the US (13%) and Israel (11%) are significant too.
Notably, Georgia is a source of remittances as well. The transfers from Georgia to Russia amounted to $35mn in January-June and those to Turkey amounted to $18mn. Transfers to Ukraine, $11mn, were half the value of the transfers from Ukraine to Georgia. In the case of Russia, the ratio a small yet significant 24%.
26​ GEORGIA Country Report ​August 2020 ​ ​www.intellinews.com