RoboForex analyst: remittances of guest workers to Ukraine decreased by 8% in the first quarter of 2023

The NBU reported on the state of Ukraine’s balance of payments. The analyst drew attention to the data on the export of computer services and transfers of labor migrants. Remittances from our guest workers remain one of the main sources of foreign currency. This indicator has been growing for the past 5 years, the increase was observed even in the “covid” 2020 and “war” 2022 years. The simplified visa regime with the EU became the reason for such a rapid development of labor force exports. The sale of IT services has been dynamically developing in our country since 2010. Even the coronavirus pandemic did not affect the pace of its acceleration, however, military actions and problems in the energy sector are beginning to have a negative impact. The mass migration of families from hostilities affected the decrease in the volume of remittances of labor migrants. This was reported by Andrey Goilov, RoboForex analyst.

The dynamics of these operations are presented in the diagram below.

Transfers of guest workers for January 2022/2023 (million US dollars). Source: NBU

In the first quarter of 2023, the volume of labor migrants’ remittances barely reached 3.07 billion US dollars — the decrease compared to the same period in 2022 was 8.04%. The families of guest workers spend these funds in Ukraine, thereby supporting the hryvnia exchange rate and domestic demand. Resources go directly to the economy of our country and contribute to GDP growth. The drop in the volume of this indicator will have a negative impact on the post-war recovery of Ukraine’s economy and the stability of the hryvnia exchange rate.

Export of IT services of Ukraine for January 2022/2023 (million US dollars). Source: NBU

Last year, the monthly export of IT services exceeded the indicators of 2021 only until June. In the middle of the summer of 2022, this industry began to feel the negative factors of the military confrontation. It was only in December last year that it was possible to compensate for the losses of the previous months. According to the results of the 1st quarter of this year, the export of IT services reached the mark of 1.68 billion US dollars — the decrease compared to the same period in 2022 was 16.21%. However, it should be noted that in March 2023 this figure increased by 15.16% to 600.00 million dollars compared to March 2022.

On the cash foreign exchange market, the hryvnia against the US dollar was fixed below the level of 37.60, and the euro reached the level of 40.80. Problems with the export of agricultural products only aggravate the situation, as the revenue in foreign currencies decreases.

Source: Ministry of Finance

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