WASHINGTON, June 13, 2023 – Officially recorded remittances to low- and middle-income countries (LMICs) are estimated to grow 1.4% to $656 billion in 2023, as economic activity in remittance-sending countries softens and curbs employment and wages. According to a recent report by the World Bank, gains for migrants Migration and Development Brief Released today.
This abbreviated version projects remittance growth of 8% to $647 billion by 2022. In the post-Covid era of slow economic growth and falling foreign direct investment, remittances to countries and households are increasingly important as a source of foreign financing, especially for highly indebted LMICs.
„Remittances are very complementary to government transfers and essential for households in times of need,” said Michael Rutkowski, Global Director of the World Bank’s Social Protection and Jobs Global Practice. „The World Bank leads analytical and operational work on global migration, reducing remittances and costs.”
In 2022, remittances were driven by strong oil prices in the Gulf Cooperation Council (GCC) countries, which increased the income of migrants; Large remittances from the Russian Federation to countries in Central Asia; and a strong labor market in the United States and advanced immigrant destination economies. By region, East Asia and the Pacific increased by 0.7%, Europe and Central Asia by 19%, Latin America and the Caribbean by 11.3%, South Asia by 12.2% and Sub-Saharan Africa by 6.1%. Remittances to the Middle East and North Africa region declined by 3.8%.
The top five remittance countries in 2022 are India ($111 billion), Mexico ($61 billion), China ($51 billion), Philippines ($38 billion), and Pakistan ($30 billion). Economies where remittance inflows represent large shares of GDP—highlighting the importance of remittances for financing current account and fiscal deficits—are Tajikistan (51% of GDP), Tonga (44%), Lebanon (36%), Samoa (34%) and the Kyrgyz Republic (31%). %).
„Remittances have become a source of finance in many economies through the pandemic, and will become more so in the future,” said Dilip Radha, lead author of the report on migration and remittances and president of KNOMAD. We have stepped up collaboration with source and recipient countries to improve data and improve disbursements to mobilize private sector capital through diaspora bonds and improved sovereign ratings.”
Globally, the average cost of sending $200 in the fourth quarter of 2022 was 6.2%, up slightly from 6% a year ago, and more than double the sustainable growth target of 3%, according to the bank. Global database of remittance rates. Banks are the costliest channel for sending money, with an average cost of 11.8%, followed by post offices (6.3%), money transfer operators (5.4%) and mobile operators (4.5%). Although mobile operations are cheap, they account for less than 1% of total transaction volume.
Regional remittance trends
Remittances to East Asia and the Pacific grew by 0.7% to reach $130 billion in 2022. Remittances to China are falling as growing prosperity and an aging population have slowed the pace of low-skilled immigration. Outside of China, post-pandemic demand in OECD countries for highly skilled East Asian migrants, continued demand for workers in GCC countries and increased job opportunities in Australia and New Zealand supported migrants’ ability to send remittances home. In 2023, remittances are expected to increase by 1% as slower growth in host countries affects income and employment opportunities. The average cost of sending $200 to the region was 5.7% in the fourth quarter of 2022, a slight decline from 5.9% a year earlier. Among the top five least-expensive corridors, costs have fallen by less than 3%.
Remittances to Europe and Central Asia will grow by 19% to reach a record $79 billion in 2022. The strong performance was mainly due to record high volume of remittances from the Russian Federation to neighboring countries. Russian remittance inflows increased due to the relocation of Russian companies and citizens, a strong ruble, and capital migration driven by increased demand for migrant workers in Russia. In 2022, Ukraine was the region’s largest recipient, receiving $17.1 billion in inflows, a 5.4% decline from 2021. In the first four months of 2023, remittances fell by 11.5%. to the country. By 2023, remittances to the region are expected to increase by 1%. The average cost of sending $200 to the region was 6.4% in the fourth quarter of 2022, up from 6.1% a year ago.
Remittances to Latin America and the Caribbean will grow 11.3% to $145 billion in 2022, aided by a strong US labor market. Flows to Mexico increased 12.9% to $61.1 billion. Growth in remittances varies widely across countries, with 50% in Nicaragua, 18% in Guatemala, 17.8% in Honduras and 9.7% in Colombia. In 2023, remittances are predicted to increase by 3.3%. But the prospects are tightly linked to developments in the US economy, which is slow, and risks turn to the downside. The average cost of sending $200 to the region in the fourth quarter of 2022 was 5.8%, up from 5.6% a year earlier.
After recording strong growth of 12.2% in 2021, growth in remittances to the Middle East and North Africa is projected to decline by 3.8% to $64 billion in 2022. Economies in the region that have seen little gain in remittances include many Maghreb countries. In 2023, remittance inflows are expected to increase by 1.7%, with a different outlook depending on the dominant host countries, regional subgroups and the degree of exposure to high inflation and fiscal imbalances. The average cost of sending $200 to the region in the fourth quarter of 2022 was 6.2%, up from 6.4% a year earlier.
Remittances to South Asia increased by 12% to $176 billion in 2022 due to stronger labor market conditions in OECD target economies, higher demand for low-skilled migrants in GCC countries, and anti-food price inflation measures that supported migrant incomes in the GCC. Countries. Inflows to India rose 24% to $111 billion. Other top global recipients in the region are Pakistan (ranked 5thTh) and Bangladesh (7Th) remittance inflows to reach $30 billion and $22 billion by 2022, respectively. Among remittance countries that generate a significant share of GDP, Nepal ranks 9th.Th Global remittances will equal 23% of GDP in 2022. In 2023, remittances are expected to increase by 0.3% due to slower growth in OECD economies, particularly affecting the demand for IT workers in the high-tech sector in the US. Also due to poor domestic economic conditions in Pakistan, Bangladesh and Sri Lanka the preference of informal migrants with formal channels of remittances. The average cost of sending $200 to the region in the fourth quarter of 2022 was 4.9%, up from 4.3% a year ago.
Remittances to Sub-Saharan Africa will grow by 6.1% to $53 billion in 2022. This trend was largely driven by strong remittance growth in Ghana (12%), Kenya (8.5%), Tanzania (25%), Rwanda (21%) and Uganda (17%). Remittances to Nigeria accounted for 38% of total remittances to the region, up 3.3% to $20.1 billion. Remittances supported the current accounts of many African countries dealing with food insecurity, supply chain disruptions, severe droughts (Horn of Africa), floods (Nigeria, Chad, Niger, Burkina Faso, Mali and Cameroon) and debt spreads. Service difficulties. By 2023, growth in remittances is expected to slow to 1.3%. The average cost of sending $200 to the region was 8% in the fourth quarter of 2022, up from 7.8% a year ago.
Download the report: https://www.knomad.org/publication/migration-and-development-brief-38