Remittance Flow To Developing Countries To Shrink By 14% In 2021 Due To Covid-19 – World Bank

Covid-19, Conflict and Climate Change reversing 25yrs decline in world extreme poverty – World Bank
Follow Us On Social Media
  •  
  • 1
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
    1
    Share

This Migration and Development Brief provides updates on global trends in migration and remittances.
It highlights developments related to migration‐related Sustainable Development Goal (SDG) indicators
for which the World Bank is a custodian: increasing the volume of remittances as a percentage of gross
domestic product (GDP) (SDG indicator 17.3.2), reducing remittance costs (SDG indicator 10.c.1), and
reducing recruitment costs for migrant workers (SDG indicator 10.7.1).

The economic crisis induced by COVID‐19 could be long, deep, and pervasive when viewed through a
migration lens. In October 2020, COVID‐19 case numbers rose again to surpass 44 million. The number
of fatalities surpassed 1.1 million. A recurrence of COVID‐19 phases accompanied by lockdowns travel
bans, and social distancing cannot be ruled out well into 2021. Although economic activities and
employment levels around the world have rebounded to varying degrees from the depths reached in
the second quarter (Q2) of 2020, they are still far from the pre‐crisis levels, and the near‐term outlook
remains uncertain.

For the first time in recent history, the stock of international migrants is likely to decline in 2020, as net
migration has slowed and return migration has increased. Initially, the lockdowns and travel bans left
many migrant workers stranded in their host countries, unable to travel back. More recently, however,
return migration has been reported in all parts of the world. Furthermore, rising unemployment in the
face of tighter visa and mobility restrictions is likely to result in a further increase in return migration.

The adverse effects of the crisis in terms of loss of jobs and earnings, and exposure to and sickness from
COVID‐19 has been disproportionately high for migrants, especially for those in informal sectors and lower‐skilled jobs. Having jobs has not shielded migrant workers from suffering income losses during the crisis. Anecdotal reports suggest that migrants, especially those living in dormitories or camps, are
particularly vulnerable to the risk of infection from the COVID‐19 virus.

READ  #EndSARSProtests: We must stop those influencing people on social media, says Sanwo-Olu

Based on the trajectory of economic activities in large migrant‐hosting countries, especially the United
States, European countries, and the Gulf Cooperation Council countries, remittance flows to low and
middle‐income countries (LMICs) are projected to decline by 7.2 percent, to $508 billion in 2020, followed by a further decline of 7.5 percent, to $470 billion in 2021. The projected declines in remittances are the steepest in recent history, and steeper than the 5 percent decline recorded during
the 2009 global recession. The foremost factors driving the decline in remittances are weak economic
growth and employment situation in migrant‐hosting countries, a weak oil price, and exchange rates of the currencies of remittance‐source countries against the US dollar.

This outlook for remittances indicates a more gradual but prolonged decline (continuing into 2021) than our April outlook, which forecast a sharper decline in 2020 followed by a modest recovery in 2021. The outlook for remittances remains uncertain and will depend on the impact of COVID‐19 on global growth. This is linked, in turn, to uncertainties regarding the effectiveness of efforts to restrain the spread of the
disease.

Monthly or quarterly data on remittances reveal a common intra‐year pattern in 2020: a sharp decline in April and May followed by a slow but partial recovery. Most countries, notably those in Europe and Central Asia, registered steep declines in remittances in the second quarter of the year. There was a
recovery in remittance flows starting June. Following the hiatus of April and May, it appears that some migrants drew on their savings to send money home, but that cannot be sustained for long. Another
likely reason for the observed partial recovery of remittance flows in June is a shift in flows from informal (unrecorded) hand‐carrying to formal (recorded) remittance channels. This is especially true in the case of higher‐skilled migrant workers with access to digital remittance services. A third reason is that some migrants were able to access cash transfers offered by host country governments.

READ  Receiving Money Transfers In Foreign Currency Detrimental… CBN

Three large recipients of remittances—Mexico, Pakistan, and Bangladesh—stand out as exceptions to the pattern
mentioned above: these countries escaped a decline in Q2 and seem to register increases in Q3.

Even though remittance flows will decline in 2020, their relative importance as a source of external
financing for LMICs is expected to increase. Remittance flows to LMICs touched a record high of $548
billion in 2019, larger than foreign direct investment (FDI) flows ($534 billion) and overseas development
assistance (about $166 billion). The gap between remittance flows and FDI is expected to widen further
in 2020 as FDI is expected to decline more sharply than remittances.
The declines in 2020 and 2021 will affect all regions, with the steepest drop expected in Europe and
Central Asia (by 16 percent and 8 percent, respectively), followed by East Asia and the Pacific (11
percent and 4 percent), the Middle East and North Africa (8 percent and 8 percent), Sub‐Saharan Africa
(9 percent and 6 percent), South Asia (4 percent and 11 percent), and Latin America, and the Caribbean
(0.2 percent and 8 percent).

Beyond humanitarian considerations, providing migrants access to housing and health care is necessary
to keep host communities safe from the pandemic. Migrants are on the frontline, saving people from
COVID‐19 in hospitals and science labs. They are also on the frontline in stores and restaurants, farms, and factories, keeping these businesses running. Also, it is worth noting that every dollar spent on
supporting a migrant is likely to increase remittances and thereby support many poor people in distant
countries.

READ  FIRS: Making Stamp Duty The New Black Gold

Government policy responses, especially the provision of access to health care, housing, and education,
should be inclusive of migrants in host countries and their families in origin countries. Stranded migrants
need help from governments and the development community in both host and transit countries.

Migrant workers may need protection from abuse or wage theft by unscrupulous employers. Origin
countries must find ways of supporting returning migrants in resettling, finding jobs, or opening
businesses. Many host countries and origin countries would require grants or concessional financing from third parties to provide support to migrants from other countries.

Also, governments must support the remittance infrastructure, including recognizing remittance services as essential, reducing the burden of remittance fees on migrants, incentivizing digital money transfers, and mitigating factors that prevent customers or service providers of digital remittances from accessing banking services. The governments of the United Kingdom and Switzerland, as well as IFAD, UNCDF, and the World Bank have issued calls to action to keep remittances flowing.

Finally, the crisis has exposed significant data gaps that have prevented real‐time monitoring of
remittance flows and migratory movements, including stranded migrants and returning migrants.
There is a pressing need to improve relevant data collection systems. The World Bank, through the Global Knowledge Program on Migration and Development (KNOMAD), is launching an International Working Group on Improving Data on Remittances in collaboration with National Statistical Offices, central banks, and selected international organizations to improve data on remittances and
international cooperation in the collection and dissemination of data. Culled.

 


Follow Us On Social Media
  •  
  • 1
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
    1
    Share
  •  
    1
    Share
  •  
  • 1
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Related posts