Remittance flows to low- and middle-income countries are set to increase 5 per cent on an annual basis to $626 billion in 2022, despite global macroeconomic headwinds with India to receive a record $100 billion this year, the World Bank has said.
However, the projected increase in remittances this year is lower than the 10.2 per cent growth recorded in 2021, the Washington-based lender said in its migration and development brief.
“Migrants help to ease tight labour markets in host countries, while supporting their families through remittances,” Michal Rutkowski, global director for social protection and jobs at the World Bank, said.
“Inclusive social protection policies have helped workers weather the income and employment uncertainties created by the Covid-19 pandemic. Such policies have global impacts through remittances and must be continued.”
Global remittance flows to poor and middle-income countries grew to $589 billion in 2021, according to an earlier World Bank report.
The five most common destinations for remittances were India, China, Mexico, the Philippines and Egypt.
A reopening of host economies as the Covid-19 pandemic receded supported migrants’ employment and their ability to continue helping their families back home. However, rising prices adversely affected migrants’ real incomes, the report said.
In countries that experienced scarcity of foreign exchange and multiple exchange rates, officially recorded remittance flows declined as flows shifted to alternative channels offering better rates, according to the research.
The bank said remittance flows are estimated to have increased by 9.3 per cent in Latin America and the Caribbean, 3.5 per cent in South Asia, 2.5 per cent in the Middle East and North Africa and 0.7 per cent in East Asia and the Pacific.
The percentage increase in remittances to the Mena region slowed in 2022, compared with 2021 — with $63 billion sent home this year. This was because of the erosion of real wage gains in the eurozone and occurred despite demand for remittances in home countries increasing amid deteriorating conditions, the World Bank said.
Cash transfers to the Mena region are projected to grow by 2 per cent in 2023, it added.
Inflows to sub-Saharan Africa are likely to have increased 5.2 per cent in 2022 compared with a 16.4 per cent increase last year, mainly due to strong flows to Nigeria and Kenya.
Remittance flows are estimated to have increased 10.3 per cent to Europe and Central Asia, where rising oil prices and demand for migrant workers in Russia supported remittances, the World Bank said.
In Ukraine, remittance growth is estimated at 2 per cent, while hand-carried money transfers likely increased, the lender added.
Labour shortages in the hospitality and health sectors of high-income economies and higher oil prices benefiting GCC countries boosted demand for workers in 2022, which supported remittances to the East Asia and Pacific region, the report said.
Meanwhile, stronger employment of migrants from Latin America in the US contributed to higher remittance flows to Latin America and the Caribbean.
Remittances to India were enhanced by wage hikes and a strong labour market in the US and other OECD countries, the World Bank said.
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The global average cost of sending $200 remained high at 6 per cent in the second quarter of 2022, the World Bank said.
It is cheapest to send money via mobile operators at 3.5 per cent, but digital channels account for less than 1 per cent of total transaction volume.
Average remittance costs were the lowest in sub-Saharan Africa at 3.4 per cent, while Europe and Central Asia have the highest average cost at 6.4 per cent, the report added.