Global remittances are projected to experience their sharpest decline in recent times — 20% — owing to migrants losing jobs and wages because of the COVID-19 pandemic , the World Bank Group said in a report released on April 22. The pandemic and declining oil prices are likely to reduce remittances from the U.S., U.K., and E.U. countries to South Asia, resulting in a projected fall of 22% in remittances to $109 billion. This is in stark contrast to 2019 when they grew by 6.1%.
In India, remittances for 2020 are projected to fall by 23% to $64 billion, the report, “COVID-19 Crisis Through a Migration Lens” said. The remittances grew 5.5% in the previous year to $83 billion.
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Remittances are crucial in low- and middle-income countries, financing household and family expenses — such as on higher education. The Bank worried that as studies have shown that higher remittances improve nutritional outcomes by increasing investments in higher education, a fall in these remittances puts these outcomes at risk. This is especially true at a time when households were tackling food shortages and financing livelihood needs.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” World Bank Group President David Malpass said in a statement.
The sharpest decline was for Europe and Central Asia — where Russia is a strong source of income and the ruble had weakened against the U.S. dollar. Sub-Saharan Africa and South Asia were next in terms of projected declines.
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Remittance costs for some channels in South Asia are below 3%, the SDG (Sustainable Development Goal ) target. South Asia also has the lowest remittance costs of any region — in some corridors in the region they were above 10% due to a lack of competition, regulatory concerns and low volumes.
“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families. These include treating remittance services as essential and making them more accessible to migrants,” the Brief’s lead author, Dilip Ratha, said.
