Remittances to developing countries are expected to reach $435 billion this year, representing a 5 percent increase over 2013. Remittances also grew faster this year–in 2013, the annual growth rate was around 3.4 percent. The main drivers for growth were Asia and South America.
The growth trend is forecasted to carry-over into 2015, with remittances reaching an estimated $454 billion next year.
Global remittances, including those to high-income countries, are estimated at $582 billion this year and are project to increase to $608 billion next year.
Remittances bring in large amounts of foreign currency to developing economies–they were worth more than both foreign direct investment (FDI) to all developing nations except China and were three times larger than official development assistance.
“Remittances to developing countries grew this year by 5 percent. Remittance inflows provided stable cover for substantial parts of the import bill for such countries as Egypt, Pakistan, Haiti, Honduras, and Nepal. India and China lead the chart with projected remittance inflows of, respectively, $71 and $64 billion in 2014. In addition, India and the Philippines benefit from having migrants with the most diverse destination spread, thereby creating buffers against regional shocks. Given the growing importance of this sector, the World Bank’s Migration and Development Brief has become an essential tool for global development policy experts,” said Kaushik Basu, Senior Vice President and Chief Economist of the World Bank Group.
The cost of sending remittances has also been on the decline heading into Q4 2014, falling to 7.9 percent of the value sent, compared to 8.9 percent a year earlier. Africa remains the exception to that rule, with costs stubbornly perched at 11 percent.
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