Georgia, Armenia, Turkey: Economies boom with Russian wealth, migration

As many economies reel from the impact of Russia’s invasion of Ukraine, a select few countries are benefiting from an influx of Russian migrants and their accompanying wealth.

Georgia,  Armenia,  Turkey, Economies boom, Russian wealth

As many economies reel from the impact of Russias invasion of Ukraine, a select few countries are benefiting from an influx of Russian migrants and their accompanying wealth.

Georgia, a small former Soviet republic on Russias southern border, is among several Caucasus and surrounding countries, including Armenia and Turkey, to have seen their economies boom amid the ongoing turmoil.

At least 112,000 Russians have emigrated to Georgia this year, according to reports. A first wave of almost 43,000 arrived following Russias invasion of Ukraine on Feb. 24, while a second wave — whose number is harder to determine — entered after Putins military mobilization drive in September.

The countrys initial wave accounts for almost a quarter (23.4%) of all emigres out of Russia up to September, according to an online survey of 2,000 Russian migrants conducted by research group Ponars Eurasia. The majority of the remaining Russian migrants have fled to Turkey (24.9%), Armenia (15.1%) and uncited "other" countries (19%).

The influx has had an outsized impact on Georgias economy — already on the up following a Covid-19 slowdown — and the Georgian lari, which has risen 15% against a strong U.S. dollar so far this year.

The International Monetary Fund now expects Georgias economy to grow by 10% in 2022, having revised up its estimate again this month and more than tripled its 3% forecast from April.

"A surge in immigration and financial inflows triggered by the war," were among the reasons cited for the uptick. The IMF also sees fellow host country Turkey growing 5% this year, while Armenia is set to surge 11% on the back of "large inflows of external income, capital, and labor into the country."

Georgia has benefitted from a dramatic surge in capital inflows this year, primarily from Russia. Russia accounted for three-fifths (59.6%) of Georgias foreign capital inflows in October alone — the total volumes of which rose 725% year-on-year.

Between February and October, Russians transferred $1.412 billion to Georgian accounts — more than four times the $314 million transferred over the same period in 2021 — according to the National Bank of Georgia.

Meanwhile, Russians opened more than 45,000 bank accounts in Georgia up to September, almost doubling the number of Russian-held accounts in the country.

Georgias strategic location and its historic and economic ties with Russia make it an obvious entry point for Russian migrants. Meanwhile, its liberal immigration policy allows foreigners to live, work and set up businesses without the need for a visa.

Like Armenia and Turkey, too, the country has resisted enforcing Western sanctions on the pariah state, leaving Russians and their money to move freely across its border.

Turkey, for its part, has granted residence permits to 118,626 Russians this year, according to government data, while one-fifth of its foreign property sales in 2022 have been by Russians. The Armenian government did not provide data on its migration figures or property purchases when contacted by CNBC.

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