India Takes Top Spot, Expected to Receive Total Remittance of $80 Billion in 2018

0
140

Washington–India is expected to receive a total remittance of $80 billion in 2018, said the latest edition of the World Bank’s Migration and Development Brief, released on Saturday.

“Among major remittance recipients, India retains its top spot, with remittances expected to total $80 billion this year, followed by China ($67 billion), Mexico and the Philippines ($34 billion each), and Egypt ($26 billion),” the brief said.

“As global growth is projected to moderate, future remittances to low and middle-income countries are expected to grow moderately by 4 per cent to reach $549 billion in 2019. Global remittances are expected to grow 3.7 per cent to $715 billion in 2019.”

According to the brief, remittance flows rose in all regions and was driven by a stronger economy and employment situation in the US and a rebound in outward flows from Gulf Cooperation Council (GCC) countries and the Russian Federation.

Remittances to low- and middle-income countries grew rapidly and are projected to reach a new record in 2018, says the latest edition of the World Bank’s Migration and Development Brief.

The Bank estimates that officially recorded remittances to developing countries will increase by 10.8 percent to reach $528 billion in 2018. This new record level follows robust growth of 7.8 percent in 2017. Global remittances, which include flows to high-income countries, are projected to grow by 10.3 percent to $689 billion.

Remittance flows rose in all regions, most notably in Europe and Central Asia (20 percent) and South Asia (13.5 percent), followed by Sub-Saharan Africa (9.8 percent), Latin America and the Caribbean (9.3 percent), the Middle East and North Africa (9.1 percent), and East Asia and the Pacific (6.6 percent). Growth was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from Gulf Cooperation Council (GCC) countries and the Russian Federation.

As global growth is projected to moderate, future remittances to low- and middle-income countries are expected to grow moderately by 4 percent to reach $549 billion in 2019. Global remittances are expected to grow 3.7 percent to $715 billion in 2019.

The Brief notes that the global average cost of sending $200 remains high at 6.9 percent in the third quarter of 2018. Reducing remittance costs to 3 percent by 2030 is a global target under Sustainable Development Goal (SDG) 10.7. Increasing the volume of remittances is also a global goal under the proposals for raising financing for the SDGs.

“Even with technological advances, remittances fees remain too high, double the SDG target of 3 percent. Opening up markets to competition and promoting the use of low-cost technologies will ease the burden on poorer customers,” said Mahmoud Mohieldin, Senior Vice President for the 2030 Development Agenda, United Nations Relations, and Partnerships at the Bank.

The average cost of remitting in South Asia was the lowest at 5.4 percent, while Sub-Saharan Africa continued to have the highest at 9 percent. No solutions are yet in sight for practices that drive up costs, such as de-risking action of banks, which lead to closure of bank accounts of remittance service providers. Another persistent factor that keeps fees high is the exclusive partnership between national post office systems and any single money transfer operator, as it allows the operator to charge higher fees to poorer customers dependent on post offices.

“The future growth of remittances is vulnerable to lower oil prices, restrictive migration policies, and an overall moderation of economic growth. Remittances have a direct impact on alleviating poverty for many households, and the World Bank is well positioned to work with countries to facilitate remittance flows,” said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.

The Brief also reports progress in monitoring the SDG target for reducing recruitment costs paid by migrant workers, which tend to be high, especially for lower-skilled migrant workers.

“High recruitment costs paid by low-skilled migrant workers can be a huge drain on remittance flows. Sometimes, recruitment costs amount to more than 2 years of a migrant worker’s income. Reducing recruitment costs by improving recruitment practices can significantly increase remittance flows to poor families,” said Dilip Ratha, lead author of the Brief and head of KNOMAD. Reducing recruitment costs is a goal under SDG 10.7 for promoting safe, orderly, and regular migration.

Regional Remittance Trends

Remittance flows to the East Asia and Pacific region are expected to grow by 6.6 percent in 2018 to $142 billion, 1.5 percentage points higher than the growth rate in 2017. Remittances to the Philippines are expected to grow by 2.8 percent in 2018, lower than 2017’s 5.4 percent growth. Lower growth is due to the substantial decline in private transfers from the Middle East which fell by 17 percent in the first 8 months of 2018 relative to the same period in 2017. Remittances to Indonesia are expected to experience double digit growth in 2018 at around 24 percent, after remaining flat in 2017. Remittances to the region are expected to grow 4.2 percent in 2019.

Remittance flows to countries in Europe and Central Asia remained robust in 2018, rising by about 20 percent in 2018, reaching a new record high of $63 billion. Improving growth increased outward remittances from Poland, Russia, and Spain, major remittances sources for the region. The Commonwealth of Independent States economies have particularly benefited from the continued rebound in the Russian economy. As the region’s growth stabilizes, remittances are expected to grow 4 percent in 2019.

Remittances flows into Latin America and the Caribbean grew by about 9.3 percent in 2018 to reach $87 billion, led by Mexico and Central American countries. The strong growth in 2018 was driven mainly by the strong U.S. economy and labor market, where the majority of the region’s migrants reside. Improving fundamentals were also seen in Spain, the second largest host of migrants from the region. Intra-regional migration also contributed to the rise in remittances. Remittance growth for the region is expected to slow down to 3.8 percent in 2019.

Remittances to the Middle East and North Africa region are projected to grow by 9.1 percent to $59 billion in 2018, following 6 percent growth in 2017. The growth rate is driven by Egypt’s projected rapid remittance growth of 14 percent. In contrast, remittances to Jordan are projected to decline by 1 percent in 2018. Beyond 2018, the region is expected to experience continued growth in remittances, although at a slower pace of 2.7 percent in 2019. Lower oil prices are expected to moderate growth in GCC countries and remittance outflows will also be dampened by nationalization policies of Saudi Arabia, notably in sectors banning foreign workers as of 2018.

Remittances to South Asia are projected to increase by 13.5 percent to $132 billion in 2018, a stronger pace than the 5.7 percent growth seen in 2017. The upsurge is driven by stronger economic conditions in advanced economies, particularly the United States, and the increase in oil prices having a positive impact on outflows from some GCC countries, such as the United Arab Emirates which reported a 13 percent growth in outflows for the first half of 2018. Bangladesh and Pakistan experienced upticks of 17.9 percent and 6.2 percent in 2018, respectively. For 2019, it is projected that remittance growth for the region will slow to 4.3 percent due to a moderation of growth in advanced economies, lower migration to the GCC and the benefits from the oil price spurt dissipating.

Remittances to Sub-Saharan Africa continued to accelerate in 2018 and are estimated to grow by 9.8 percent to $45 billion in 2018. Projections indicate that remittances to the region will keep increasing but at a lower rate of 4.2 percent in 2019. The upward trend observed since 2016 is driven by strong economic conditions in advanced economies, particularly the United States, where many of the region’s migrants earn their income. In addition, because of large intra-regional migration flows in the region, remittance flows are expected to keep increasing due to projected strong regional economic growth in 2019.

LEAVE A REPLY

Please enter your comment!
Please enter your name here