Although a sharp fall in the ruble led to increased FX pressures both in Kazakhstan and Uzbekistan in August, our currency outlook for Kazakhstan in 2023-2024 remains positive

The massive migrant exodus from Russia could exacerbate social pressures across Central Asia and the Caucasus (CCA) region

MNCs in the CCA region should brace for increased pressure on local currencies due to the ruble’s depreciation and reduced remittances, and its potential impact on inflation given the strong pass-through effect. Considering the recent performance of the ruble, we anticipate a more pronounced depreciation of the Uzbek som in 2023–2024. Meanwhile, the Kazakh tenge is expected to maintain a relatively stronger position in 2023–2024 compared to 2022, supported by consistent transfers from the National Fund and assuming uninterrupted oil exports.

Reduced remittances from Russia compared to 2022 will also curtail consumer demand in 2023–2024, affecting Uzbekistan, the Kyrgyz Republic, and Tajikistan, which heavily rely on remittances. MNCs should also remain vigilant regarding potential social tension or even civic unrest stemming from a massive return of labor migrants from Russia due to anticipated mobilization and further ruble depreciation.


  • The ruble lost 27.5% of its value against the US dollar and 29.9% against the euro in the first seven months of 2023. The recent policy rate hike by the Bank of Russia has somewhat reduced the pace of ruble depreciation, bringing it below RUB 100 per USD. However, a weakened ruble is projected to persist throughout the remainder of this year and into 2024.
  • According to an online poll among 22,800 Uzbek diaspora members in Russia, 50% of respondents may leave Russia due to the weakening ruble.
  • Rumors about the upcoming mobilization is another fear among the migrants who hold Russian citizenship. A pair of police raids in St. Petersburg and Chuvashia, which led to over 100 naturalized citizens who had not registered for military services being taken for military registration, has escalated these concerns.
  • The chairman of the Council on Human Rights of Russia, Valery Fadeev, called for the synchronization of passport issuance and military registration to avoid people dodging the military service.

Our View

Concerns about conscription and the falling ruble will force more and more migrants to leave Russia in 2023–2024. The State Duma is now discussing new amendments to the legislation aimed at substantially raising patent fees for migrants in Russia. Should the amendments be approved, they could potentially encourage more migrants to leave Russia and might inadvertently contribute to an increase in illegal migrant numbers. The return of low-skilled migrants to their home countries will create a large unemployed labor pool, thus we do not anticipate any significant improvement in the unemployment levels in CCA. Conversely, the failure of CCA governments to timely and systematically address this challenge through appropriate measures might intensify public discontent among the population.

This outflow of migrants will further strain Russia’s already-tight labor market, particularly in sectors such as construction, agriculture, trade, and tourism, which rely significantly on migrant workers. While the official proportion of labor migrants remains under 3% (around 10% in certain sectors), it is widely believed that the actual number of migrants working and living in Russia surpasses these figures. According to official sources, during the first quarter of 2023, the influx of migrants arriving to work in Russia reached 1.3 million, marking a 1.6-fold increase compared to the same period in 2022. Notably, the majority originated from Uzbekistan (49%), followed by Tajikistan (27%) and the Kyrgyz Republic (13%).

Although an immediate surge in the outflow of migrants from Russia as a result of the deteriorating economic outlook is not expected, it is clear that Russia is gradually losing its appeal as a preferred destination for migrants from the CCA region. The current positive trend in net migration, driven mainly by migrants from CIS countries, is expected to reverse and turn negative if Russia’s foreign and domestic policies remain unchanged in the near future. This will further worsen demographic and labor market conditions in Russia, thereby impacting the economy’s long-term growth.

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