The Impact of Remittances on Household Consumption in Central Asia
DOI:
https://doi.org/10.17605/cajssh.v6i4.1209Keywords:
Remittances, household consumption, GNI growth, inflation, unemployment, domestic credit, Central Asia, Uzbekistan, economic correlation, macroeconomic indicatorsAbstract
Remittances serve as a critical financial lifeline for households in developing countries, often surpassing foreign direct investment and official development aid, yet their long-term developmental role remains debated. In Central Asia, and particularly in Uzbekistan, remittances flow predominantly through regional migration corridors, influencing household consumption patterns in ways that diverge from other migration contexts. While the poverty-alleviating effects of remittances are documented, less is known about their relationship to broader macroeconomic indicators such as GNI growth, inflation, unemployment, and domestic credit in Central Asia. This study investigates the correlation between remittance inflows and household consumption growth in five Central Asian countries from 2006–2022, with a focus on Uzbekistan. Findings reveal significant cross-country differences: Uzbekistan exhibited the highest average consumption growth (13.5%) despite the highest remittance volatility, while Kazakhstan had high remittance growth but the lowest consumption growth. In Uzbekistan, consumption growth strongly correlated with GNI growth (0.872) and remittances (0.809), while inflation negatively correlated with both. Domestic credit showed strong positive links with GNI and remittances. The study highlights Uzbekistan’s relative resilience to remittance volatility, suggesting structural or alternative income sources that buffer household spending from external shocks. The results underscore the need for policies that stabilize income, control inflation, and expand access to credit to enhance the welfare and economic stability of remittance-receiving households, while future research should employ causal models to refine understanding of remittance-driven consumption dynamics.
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