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Remittances, the transferring of money by a foreign
worker to his or her home country, flowing into
developing countries in 2009 are expected to be $304
billion, a figure which is down from the estimated $328
billion in 2008. These projections were released today
by the World Bank, in a brief discussing new migration
and remittances, released to coincide with the
International Diaspora and Development Conference,
running from July 13-14.
Unchanging Migration
The predicted decline in remittances of 7.3% this year
is far smaller than that of the flow into developing
countries. According to the World Bank, remittances are
relatively resilient to the financial crisis because,
while new migration flows have declined, the number of
migrants living overseas has remained consistent.
Possible Risks
However, some sources of risk to the present outlook
include uncertainty about the depth and duration of the
current crisis, unpredictable fluctuations in exchange
rates, and also the possibility that immigration
controls may be further tightened in major destination
countries. Hans Timmer, Director of the World Bank
Development Prospects Group explains: “There is a risk
that rising unemployment will trigger further
immigration restrictions in major destination countries.
Such restrictions would curb remittances more than
forecast, and would slow the global recovery in the same
way as protectionism against trade would endanger a
global upturn”.
Slow Forecasts
Remittances have slowed in many areas since the last
quarter of 2008. In line with a recent downward revision
in the World Banks forecast of global economic growth,
the new update (2009-2011) highlights the impact of the
present financial crisis on the remittance flows and
describes broad regional and country specific trends.
Remittance flowing to Latin America has been falling,
largely because of a slowdown in the US construction
sector. The new forecast shows a 6.9% decline in
remittances for the Latin America and Caribbean region.
Sub-Saharan Africa is also likely to experience an 8.3%
slowdown in its remittance flows.
Asia Remains Strong
However, flows to South Asia and East Asia have been
strong, but remittances are expected to decline somewhat
in 2009. India, China and Mexico retain their position
as the top recipients of migrant remittances among
developing countries. Smaller economies such as
Tajikistan, Moldova, Tonga, Lesotho, and Guyana are the
top recipients in terms of the share of remittances in
GDP; which exceeded a quarter of their GDP.
“Remittances provide a lifeline to many poor countries.
Although they remain resilient, even a small decline of
7 or 10% can pose significant hardships to the people
and to governments, especially those facing external
financing gaps. Reducing remittance fees and developing
innovative tools to leverage remittances for financial
inclusion and capital market access should be a part of
our response to the financial crisis”,” said Dilip Ratha,
Lead Economist in the Development Prospects Group of the
World Bank.
The Business and Benefits of Remittances
The mass migration of highly skilled people, or “brain
drain”, poses serious problems for many smaller
low-income countries. In Haiti and Jamaica for example,
eight out of every 10 university graduates are living
abroad. The financial help sent back to their homeland
is of utmost importance. Also, since these transactions
are private, they should not be considered a substitute
for debt or other aid. In addition to increasing the
level of consumption, the constant flow of foreign money
generates and improves the creditworthiness of a
country, especially when trying to access external
financing.
Swisslatin (adapted by Stephen Hinch)
15.07.2009 |
