COVID-19: Remittance flows to shrink 14% by 2021 | Daily News

COVID-19: Remittance flows to shrink 14% by 2021

WASHINGTON, October 29, 2020 — As the COVID-19 pandemic and economic crisis continues to spread, the amount of money migrant workers send home is projected to decline 14 percent by 2021 compared to the pre COVID-19 levels in 2019, according to the latest estimates published in the World Bank’s ‘Migration and Development Brief’.

Remittance flows to low and middle-income countries (LMICs) are projected to fall by 7 percent, to $508 billion in 2020, followed by a further decline of 7.5%, to $470 billion in 2021.

The foremost factors driving the decline in remittances include weak economic growth and employment levels in migrant-hosting countries, weak oil prices; and depreciation of the currencies of remittance-source countries against the US dollar.

“The impact of COVID-19 is pervasive when viewed through a migration lens as it affects migrants and their families who rely on remittances,” said Mamta Murthi, Vice President for Human Development and Chair of the Migration Steering Group of the World Bank.

The declines in 2020 and 2021 will affect all regions, with the steepest drop expected in Europe and Central Asia (by 16 percent and 8%, respectively), followed by East Asia and the Pacific (11% and 4 %), the Middle East and North Africa (8% and 8%), Sub-Saharan Africa (9% and 6%), South Asia (4 percent and 11 percent), and Latin America and the Caribbean (0.2% and 8%).

The importance of remittances as a source of external financing for LMICs is expected to amplify in 2020, even with the expected decline.

Remittance flows to LMICs touched a record high of $548 billion in 2019, larger than foreign direct investment flows ($534 bn) and overseas development assistance (about $166 bn). The gap between remittance flows and FDI is expected to widen further as FDI is expected to decline more sharply.

“Migrants are suffering greater health risks and unemployment during this crisis,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.