Benefit or precondition for crisis | The influence of Russian migrants on the Georgian economy

Russian citizens seek refuge in neighboring countries amid war, mobilization, and sanctions of the west. According to a recent report by the Washington Post, an estimated 500,000 to one million Russian citizens have left their country since February 24.

Georgia has become one of the most attractive destinations for migrants, due to its visa-free regime and countless other favorable conditions. Since February 24 Russians have been hoarding at the country’s northern border, which has had a significant impact on a small economy like Georgia.

Since the war began, migrants have been actively trying to figure out the living conditions in Georgia and what sort of journey they would have to take to come here as a resident.

This text, written by a Russian migrant in a Telegram chat was taken from the ‘Data for Crisis’ portal. A system, created using social listening mechanisms, usually tells us more about who these Russian migrants are and what they are doing in Georgia than numbers and statistics - this AI observes the activities of migrants in various social networks and offers analyses of their discussions. Finally, processed statistics, ensured with full protection of personal data, are published on the ‘Data for Crisis’ platform.

Tracking the Movement of Russian Nationals Across the Georgian border

According to Vakhtang Gomelauri, Georgia’s Minister of Interla affairs, there were 1,400,000 border crossings from the Russian Federation recorded in 2022. In 2022 a total of 869,874 citizens of Russia entered Georgia, while 809,873 left the country. Whereas in 2023 approximately 137,000 Russians were able to cross the border.

“We know that there are a lot of people at the border who are working as taxi drivers or carrying loads. A Russian citizen might re-enter the country 3 and 5 times each day”, - the minister said.

Data from Data for Crisis suggests the large influx of Russian migrants as well - since the start of the war, the number of posts on social media related to migration has increased fourfold. For example, In the period from February 2021 to the start of the conflict, there were 575,990 such posts, while from the start of the war to February 2023, the number rose to 2,430,790.

Many of these posts are from Russian migrants living in Georgia, who share their experiences and advice with others who are considering making the move. Some of the posts even include tips on how to navigate the bureaucratic system and deal with sanctions.

What Can Be Said About the Russian Migrants in Georgia?

The representatives of various professions and social strata who migrated from Russia to Georgia are difficult to track due to the lack of official statistics.

However, a sociological survey conducted by the German economic team in collaboration with the Caucasus Research Resource Center shed some light on the matter. The survey, based on 366 interviews recorded until July 2022, revealed that a significant proportion of the migrants in Georgia are employed in the information technology and communication sector, with many of them working for foreign companies. The findings also indicated that the average monthly income of the migrant families was $2,600, while their average expenses were $1,600.

Given the high-paying nature of their work and the fact that they receive salaries from foreign companies, it can be inferred that these migrants did not need to adapt to the Georgian employment market, if at all.

A Search for Necessary Needs

When moving to another country, it is necessary to gather information and adapt to the local way of life. The case of Russian migrants was no exception - their primary concern was to find a place to spend the night, become acquainted with prices, and look for a job.

This is also made clear by the data on Data for Crisis, according to which, after politics, the main topic of discussion among migrants on social networks was the economy, including real estate (rent, purchase, and sale), prices, and vacancies.

Real estate in Georgia serves a dual purpose - providing shelter and serving as a means to obtain a residence permit. As per Galt & Taggart data, there is a growing interest in real estate among the migrant population. The data shows a significant increase in the real estate rental index, with a 112% rise in dollars and an 83.9% increase in GEL by the end of last year.

The influx of Russian migrants into Georgia has resulted in a shortage of apartments in the capital and a subsequent surge in prices. For the average Georgian citizen, renting an apartment has become increasingly unaffordable due to the rise in prices.

In a recent interview, economist Gia Khukhashvili highlighted the disparity between the growth of the real estate market and the statistical average income of Georgians. He attributes the unnatural growth of the real estate market to the influx of Russian migrants, who brought significant amounts of capital into the country. According to Khukhashvili, this influx of "money out of nowhere" has created an unsustainable situation that is likely to result in a collapse of the market, with far-reaching effects on the financial system.

Russian migrants have brought capital into Georgia through various means, including cash and remittances. Following the Western sanctions that led to the suspension of operations by "Visa" and "Mastercard" in Russia, they have resorted to alternative methods to transfer funds from Russian banks to Georgian accounts.

Russian migrants often choose Georgia's commercial banks due to the regulations imposed on them, which made it difficult for them to access their accounts. Out of all Georgian banks, they referred to “Credo” as the most convenient, as they provided them with better services compared to other banks.

According to the report by Transparency International Georgia (TI), last year alone, over 60,000 bank accounts were opened by migrants in Georgian banks, with substantial deposits made. Moreover, the report suggests that more than 14,000 businesses have been registered by migrants since the beginning of the conflict. These businesses, for the most part, take the form of individual entrepreneurship.

The leading economist of the ISET Policy Institute asserts that money flows from Russia and the expenditure in Georgia have produced a positive impact on the national currency. He elaborates that the adverse effects are more of a social issue than an economic one, such as the escalation of rent prices.

“The more expensive real estate in Georgia is, in general, it is better for us. But it is clear that if I own the apartment and you rent it, I have benefited significantly and you, on the contrary, have suffered. But, along with you, the migrant from Russia pays this price, and in the case of real estate, this negative effect is distributed to the consumer’s side. Naturally, it affects certain social groups negatively, but the overall effect is still positive.” - states Papava.

The Differing Attitudes Among Migrants and Georgians

Although the influx of migrants contributed to the strengthening of the lari and economic growth, the poor and the middle class faced significant economic challenges. A number of questions arose from the point of view of security.

According to Data For Crisis, the mood of confidence prevails in migrants' posts, followed by joy and fear. The mentioned statistics give us a reason to assume that migrants feel safer and calmer in Georgia. What we cannot say about Georgians. According to the data of the platform, after self-confidence, moods of fear and anger can be observed in the posts of Georgians.

What Should We Expect?

As the statistical data show, many Russian migrants in Georgia are employed in high-income fields. The indicators of real estate acquisition, residence permit requests, and businesses opened in Georgia show that some of them plan to establish themselves in Georgia, although some may leave the country in search of better conditions and move to a more favorable place - for example, Armenia.

Economic experts, while discussing the positive effects of the influx of migrants, point out that this is only a short-term benefit. In the long term, there are risks that may significantly harm the country’s economy.

Some of them also talk about taking necessary measures to insure ourselves against serious harm in the future. These include imposing a visa regime to filter out migrants, controlling the flow of money, and making Russian migrants “economic residents” so they can be taxed as well.

So far, the government is not thinking about imposing such restrictions, nor is it considering anything in the future. It is also unknown what plans the Russian citizens in Georgia have. If a large number of migrants decide to leave Georgia after the geopolitical changes, we will lose significant capital, which will have a negative effect on the economy - both on the exchange rate and on economic activity. In another case, we can assume that if a new flow of migrants does not enter the country, the inflow of additional capital to Georgia will also be hindered.

*Texts of the correspondence used in the material are obtained from the Data for Crisis platform and translated from Russian.

The multimedia material utilized data from the portal dataforcrisis.com, which assists journalists in covering migration from Russia. This material was created as a part of ForSet's Data for Crisis Fellowship, with the support of DW Akademie.

Authors: Kakhi Chakvetadze, Natia Leverashvili, Tekla Adamia

The original story was published at https://publika.ge/article/sargebeli-tu-krizisis-winapiroba-rusi-migrantebis-gavlena-saqartvelos-ekonomikaze/