From EU to Ukraine: Insights from Tempo France
Since Russia announced its invasion of Ukraine last February 2022, the conflict has been ongoing in many areas of the country. The lives of all Ukrainians are affected by this war. In this context, many predicted an increase in remittances in the corridor between the EU and Ukraine, as remittances are usually a source of support in times of crisis.
Remittances from the EU accounted for over 40% of the remittances sent to Ukraine last year. The largest sender country is Poland, which totals over an impressive 30% of the remittances sent to Ukraine, due to its Ukrainian diaspora that exceeds 3.4 million, with over 1.3 resident permits issued to Ukrainian nationals throughout 2022.
As opposed to expectations of increased remittances into Ukraine, Tempo France’s annual results show that EU-Ukraine remittances actually decreased by 5 to 10% during 2022. They underline two major factors that caused the decrease. The first one is the exodus of refugees from Ukraine to various European countries due to the war. Thus, the number of potential recipients declined throughout 2022, which diverted money flow from Ukraine to other countries where Ukrainian nationals settled temporarily or permanently.
There is another important reason for the corridor shrinking. In 2022, the economic activity in the EU weakened due to the tightening of financing conditions, higher commodity prices and generally increased uncertainty. The inflation rates elevated while increased production costs affected the end consumers. The governments' deficits were on the rise, stimulated by the energy crisis and defence expenditures.
Tempo France also reported that the average check in the corridor from the EU to Ukraine fell from EUR 250 to slightly over EUR 200 in 2022. Simultaneously, the average remittances check from Poland to Ukraine dropped from EUR175 in January to EUR140 in December. This clearly indicates a decrease in the purchasing power of potential senders.
The situation is going to change in 2023, Tempo believes. As the winter ends, a significant number of Ukrainians will come back to the country, pushing the number of potential recipients up and making the corridor greater in volume.Tempo also expects the European economic trends to most probably follow positive scenarios in many tracks as the European market is adapting itself to the new trends in the global economy.
These factors will be the grounds for both the EU to Ukraine and Poland to Ukraine corridors to reach approximately 5% growth per annum in 2023. Tempo France noted that 2023 is going to be an interesting and challenging year for international service providers, given that the competition in the corridor will be growing.
In this situation, Tempo’s experts expect the companies to mobilize all their resources to become more attractive to clients. As an example, besides zero tariffs, Tempo France offered clients its mobile application where the Polish currency, Zloty can be converted directly to Hryvni, replacing double conversion through Euro.
Tempo also pioneered the project to integrate its platform into the Stellar blockchain. This helped to ensure that the transactions are fully transparent, fast and reliable. Another advantage of the blockchain is the lowest possible costs, which provides clients with the highest rate of affordability.In 2023, Tempo is committed to making diligent and significant efforts to offer clients new technological solutions, more convenience and more loyalty, to enable seamless transfers from the EU to Ukraine.