If it takes a year to contain the COVID-19 pandemic and reopen economies, global payments could fall by as much as $108.6 billion this year, according to Asian Development Bank (ADB) economists.
“Migrant workers are among the hardest hit groups, with many facing scant job security and limited access to social assistances,” ADB economists James Villafuerte and Aiko Kikkawa Takenaka wrote in a blog posted on the Philippines-based organization’s website.
Bloomberg News reported massive unemployment and lost wages among migrant workers threatening households in Asia-Pacific, where money transfer receipts could be trimmed by $54 billion this year, the blog authors wrote.
South Asia could be among the hardest hit regions of the world, with remittances falling by 25 percent compared to their 2018 levels. In Southeast Asia, the decline is expected to be 19 percent, the blog authors wrote.
Remittances to Asia Pacific, which amounted to $315 billion last year, are a key source of income for families. Remittances also help the receiving companies’ external financing.
Most of the decline stemmed from a $22.5 billion fall in payments from the Middle East, which accounts for 41 percent of the total remittance loss in Asia.
The U.S. is not immune, the blog noted.
There was a $20.5 billion slump in remittances from the U.S., nearly 40 percent of the total. The decline in remittances from the European Union accounts for 6.3 percent of the total, or $3.4 billion. The dip from the Russian Federation amounts to $2.1 billion, of which $2 billion reflects the decline in payments going to Central Asia.
By percentage, the Middle East and the Russian Federation experienced the sharpest decline, more than one third, primarily reflecting the effects of low demand and oil prices on remittances.
“Governments in the region could help manage the impact of COVID-19 on remittances by extending temporary social services to assist stranded and returning migrants; providing income support to poor remittance-recipient families; and designing health, labor, and skills policies to help migrants return to their jobs, or be employed in their home countries,” the authors wrote.