The money transfer system Tempo France has a “positive outlook” for the dynamics of the remittances corridor between the EU and Ukraine in 2023.
The company stated that the segment “would see a 5 percent shrink in annual terms in Q1 2023.” But the remittances will “pick up in the spring of the year, and the corridor will eventually demonstrate a 5 percent growth compared to 2022.”
Summarizing the 2022 annual results, the company noted “that although many predicted an increase in remittances in the corridor between the EU and Ukraine, the sector had still seen a 5 to 10 percent decline.”
There are two 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”, Tempo said. There is another important reason for the corridor shrinking.
In 2022, the economic activity in the EU “weakened due to tightening of financing conditions, higher commodity prices and general 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 defense expenditures.”
While the total volume of remittances in Ukraine exceeded $17 billion last year, the EU accounts “for over 40 percent.” The largest country-sender is Poland, “which totals over 30 percent to the remittances segment of Ukraine.”
Tempo France reported “that the average check in the corridor from the EU to Ukraine fell from EUR250 to slightly over EUR 200 in 2022.” This clearly “indicates a decrease in the purchasing power of potential senders.”
Poland is “the main sub-segment of the EU-Ukraine corridor.” The diaspora of Ukrainians exceeds 3.4 million, and the country “has issued over 1.3 residents permits to new Ukrainian nationals throughout 2022.” Poland currently “accounts for 30 percent of remittances to Ukraine, which is more than all the other EU countries together.”
In 2022, for the reasons mentioned above, the average remittances check from Poland to Ukraine slipped from EUR175 in January to EUR140 in December. “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 percent growth per annum in 2023.”
Another important characteristic of the 2022 remittances Ukraine segment is “that most service providers nullified the tariffs in order to make transfers even more affordable for the senders.”
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 Hryvnia, 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.”
2023 is going to be a year when the players will be making diligent and significant efforts to offer the clients new technological solutions, more convenience and more loyalty, Tempo said.
The company stated that “after stabilization in 2023, the segment from the EU to Ukraine would demonstrate growth from 15 to 20 percent in 2024.”