How much emigrants’ money reaches Lithuania and how much leaves it: the share of transfers to two countries has increased significantly
Latest Bank of Lithuania (LB) data, during the first three months of 2022 the amount of personal transfers received by Lithuanian residents from abroad amounted to 464 million euros. This is a slightly higher amount than in the corresponding period of the previous year, when Lithuanian residents supplied 453 million. euros. These figures include the data of all Lithuanian financial institutions. However, it is not clear exactly how much money from each country travels to Lithuania, because LB does not publish such information publicly.
It is interesting that only “Revolut” the data shows double the numbers. The financial technology company announces that Lithuanian residents transferred more than 1 billion to Lithuania last year. euros – 52 percent. more than last year, when the amount reached 691 million. euros.
According to LB representatives, the differences could have arisen due to the different calculation methodologies used, as emigrants and their remittances are said to be. Statistics of persons who emigrated from Lithuania, who work in foreign countries for more than one year and send money to their relatives remaining in Lithuania, are included in the data of LB personal transfers.
Slightly larger changes in the LB data can be seen when assessing the remittances of Lithuanian residents abroad. If during 2021 166 million was transferred in the first three quarters. euros, that is for 2022 in the corresponding period, this amount almost doubled with 294 million. euros. These remittances grew extremely strongly to Ukraine and Sakartvela, they accounted for about half of the total increase in population remittances abroad.
It goes without saying that when the war in Ukraine started, the Lithuanian population abundantly supported the Ukrainians, which is why the share of funds they transferred to the war-ravaged country increased. But why did remittances to Sakartvela increase? Delphi The interviewed experts did not comment on this increase, nor did they reveal the exact amounts transferred to the mentioned country.
Where does the most money come to Lithuania from?
According to LB data, in 2022 in the first three quarters, the residents of Lithuania received the most remittances from the USA, the United Kingdom (UK), Germany, Norway and Ireland, and Russia is the most in this list. Almost 60% was transferred from these countries. of all remittances. LB does not disclose the exact amounts for each country.
LB Macroeconomics and Forecasting Department Chief Economist Darius Imbras in his opinion, the greatest influence in 2022 the flow of remittances in the first three quarters was caused by Russia’s war against Ukraine.
“Due to the imposed sanctions and the deteriorating situation of the Russian economy, the Russian ruble has depreciated very strongly, and as a result, remittances converted into euros have also decreased significantly. During this period, they were almost 2.5 times lower than last year. Also, due to the ongoing war on the territory of Ukraine, the flows of remittances from emigrants from this country fell sharply. True, remittances from people living in Lithuania to residents of Ukraine also increased significantly.
As for remittances from other countries, their volumes increased by almost a fifth. Larger amounts were motivated by increased prices and significant expenses of residents in Lithuania, due to the relatively favorable financial opportunities of the Lithuanians living there,” comments D. Imbrasas.
SEB bank economist Tadas Povilauskas calculates that comparing 11 months of the previous year with 2021 in the same period, the increase in remittance flows is insignificant and amounts to 5 percent.
“This is a minimal increase. the euro weakened against other currencies. If you keep that actual amount in dollars or something else, the conversion may be higher.
This may also be related to reduced emigration. The number of Lithuanians living abroad is almost unchanged. As far as I remember, in 2022 slightly more Lithuanians returned to Lithuania than left. This has been the case for three years in a row.
The salary of people working abroad is also high. It is normal, the number of some people does not change anymore, but if their salary is involved, it affects the amounts transferred to Lithuania”, the economist assesses.
According to him, usually the main recipients of money are relatives, who cover living expenses or housing loans with the received money.
“In 2022 inflation in Lithuania increased very significantly – 20 percent, but remittances to Lithuania grew by 5-6 percent. This also shows that the recipients of remittances in Lithuania were not able to receive money from working family members more than they needed,” says T. Povilauskas.
Data from the financial program “Revolut” show a slightly different top five countries from which the most money is transferred to Lithuania: the UK remained the absolute leader (180 million euros transferred last year), followed by Germany (107 million), France (103 million) , Italy (69 million), Spain (64 million).
The average amount transferred by one person per year from Germany reached 4,000 euros, Norway – 4,160 euros, and France – 4,500 euros. Compared to 2021, they all grew. The situation was somewhat different with money sent to the UK: the average annual amount per customer shrank by a few percent and reached 3,200 euros.
The amount of one transfer from the UK also decreased: last year it reached 300 euros, and last year it fell to 260 euros. Transfers from other countries were higher: the average transaction from Italy was 370 euros, from Spain – 390 euros, from Germany – 475 euros, from France – 715 euros.
According to “Revolut”, the portrait of a typical customer has changed: if before the most money was sent by 35-44 year olds. people, it was younger people – 25-34 years old – who were the leaders last year. – Lithuanians. The transfers of even younger people (18-24 years old) also increased almost three times: if last year the amount reached 40 million. euros, which exceeded 136 million last year. euros.
The importance of remittances to the Lithuanian economy is declining
According to economists, the importance of residents’ remittances to the Lithuanian economy and households is constantly decreasing.
“Of course, there are different households, but in general, remittances from abroad are no longer the factor that influences the income and consumption decisions of Lithuanian households.
For example, in 2021 the total disposable income received by households amounted to 34.1 million EUR, while remittances from abroad in the same period received only 618 million. euros. Thus, they accounted for less than 2 percent. disposable income of all households.
This shows that during the last decade, as the income of the Lithuanian population grew, the importance of remittances from abroad decreased compared to the period after 2008-2009. crisis, when the share of remittances from abroad by emigrated compatriots was several times more than the share of disposable income of the Lithuanian population”, comments the LB representative.
“Roughly speaking, we ended last year with a number that will be close to 650 million. EUR, and Lithuania’s GDP was about 67 million. euros. Remittances will be less than 1 percent for the next ten years. GDP, and in 2011 this number was close to 4 percent,” he says of SEB Bank economist T. Povilauskas.
Where do Lithuanians transfer the most money?
LB data show that during the quarters of the previous year, Lithuanian residents sent the most remittances to Ukraine, Sakartvela, the UK, Germany and Russia. 55% was transferred to these countries. of all remittances.
“In the case of Russia, almost the entire amount of remittances was transferred in 2022. first quarter In the second and third quarters, these flows did not remain. Similar trends can be seen in remittances to Belarus, which was among the largest recipients of remittances in 2021,” D. Imbras points out.
According to him, these remittances to Ukraine and Sakartvela increased very strongly, they accounted for about half of the population (64 million euros) of the total increase in remittances abroad. Economists do not assess the possible reasons for the increase in cash flows to Sakartvela.
“In 2022, the amount transferred by natural persons of SEB Bank’s clients to Sakartvelas increased a little more than twice. However, the amount of transfers in 2022 was lower than in 2020, so yes, the amount transferred in 2022 was preserved, but not more than in 2020. Since the amount transferred in euros per year is relatively non-existent, we do not want to guess who and for what purposes transferred more in 2022, and less in 2021 than the year before,” says T. Povilauskas.
Revolut’s data also shows a considerable transfer to Sakartwell’s growth: last year, compared to 2021, there was a 4-fold increase in the total transfer of 1.3 million. amount of euros (last year it was 232 thousand euros), both the amount transferred by one customer per year (almost 3000 euros) and the amount of one order that exceeded 700 euros.
According to Revolut, transfers from Lithuania abroad grew by 242 million last year. euros. Lithuanians mostly sent money to the UK, Germany, the USA, and Spain. The largest percentage change is related to Ukraine – 600% was transferred to the war-torn country last year. more money than last year.
One customer from Lithuania transferred 1,312 euros on average, the average amount of one transfer was 200 euros – 54 percent. more than last year. The most money is sent in one order to Turkey (the average transaction amount exceeded 1000 euros), the USA (790 euros), Estonia (370), Germany (300), Spain (280).
People aged 25-34 transferred the most money from Lithuania, followed by slightly older people – 35-44. There has been a significant increase in young people – 18-24 years old. – people’s orders, here the fixed growth reaches 110 percent.
According to the LB representative, the development of remittances mainly depends on how the Lithuanian economy will fare in the near term and the economic situation in the countries from which most remittances are received.
“If the unfavorable economic winds in these countries will be significantly stronger than in Lithuania, then the Lithuanians living there may not have as many opportunities to help their family members remaining in Lithuania. Of course, if there was a reverse scenario, then the trends seen from previous periods should be repeated”, comments D. Imbras.
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