By Michael Patrick McSweeney (@mpmcsweeney)
Remittance payments are surging in the developing world due to escalating demand in fast-growing markets such as India and China, an October 2 report from the World Bank suggests.
The study found that China and India currently account for $131 billion, or 31 percent, of remittances from developing markets, and that these countries will drive the sector to top $540 billion by 2016. This figure would be up from the $414 billion expected in 2013. Globally, more than $700 billion in remittances across all markets are expected to sent annually by this time.
“Growth of remittances has been robust in all regions of the world, except for Latin America and the Caribbean, where growth decelerated due to economic weakness in the United States,” the report noted.
The World Bank divided the data into the major economic regions of the world. This structure illustrates the wider trends shaping the market and helps remittance solutions providers chart the future course of transfer patterns.
Which types of markets are the most active in terms of remittance receivership? Read on to see how the World Bank breaks down the numbers.
World Bank’s Top Remittance Markets
Outside of China and India, which accounted for $71 billion and $60 billion in remittances, respectively, the Philippines, Mexico and Nigeria comprised the top five markets. Each of these three countries accounted for more than $20 billion in spend.
The World Bank noted that Bangladesh, Pakistan, Vietnam and Ukraine were other large developing markets. Russia, Lithuania and Uruguay were no longer considered developing countries for the purpose of the report, also affecting the data.
The MENA And Latin American Markets
Regional conflicts pose challenges for remittance transfers in the Middle East and North Africa, particularly in Syria, which accounted for $1.6 billion in remittances during 2010, the report found. Money transfers to Egypt tripled in 2013, compared to 2009 levels.
Employment issues and falling consumer demand in the U.S. economy have led to a fall in remittances sent to Latin American nations, particularly Mexico. The World Bank stated that a drop in migratory flows between the two nations’ borders could account for the decline.
Top Challenges To The Remittance Market
There are a number of structural problems facing the remittances industry, according to the World Bank, including ongoing civil conflicts and the slow recovery in the U.S. economy.
The World Bank reported that some international banks are pulling out of the market altogether due to the risk of facilitating funds for criminal and terrorist activity.
Some observers also suggest that remittance obstacles will be removed as more mobile options are made available. For more on the mobile money transfer market, read a synopsis of Juniper Research’s latest report here.
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