COVID-19 Puts $100B Dent In Global Remittance Flows

Remittances are set to decline by $100 billion

The world remittance fall-off anticipated because of the coronavirus pandemic could have serious effects for numerous countries, according to a Financial Times report that cited the World Bank.

The projected decline is expected to be more than $100 billion from what it was last year, draining an important resource used by developing countries like Somalia, Haiti and South Sudan.

Those countries could see a 20 percent drop in the remittance flows, from $554 billion last year to $445 billion now — a number which will also hit even larger countries like Egypt, Pakistan, Nigeria, India and the Philippines, which also use remittances for some external financing.

Leading World Bank Economist Dilip Ratha, who primarily works in remittances and migration, said the “human story” of the effect of this fall-off would be catastrophic. For migrants, he said, the decline in remittances could mean destabilizing effects in terms of their employment, which could take a long time to recover. Migrant workers are often the first to lose their jobs during economic crises.

Migrant workers, in the World Bank’s estimation, have been largely left out of the conversation by governments responding to the pandemic, with allegations that Saudi Arabia and Qatar have even been deporting migrants amid the pandemic.

In response, officials have said any deportations have only been for cases where crimes were committed. Saudi officials maintain that they’re following the law and trying to work with migrants.

In Ratha’s opinion, remittances should be considered an essential service during the pandemic. Some companies have worked on digital alternatives to getting remittances back to those who need them.

The World Bank estimates that there were 272 million migrant workers working internationally, refugees included, in 2019. There were also over 700 million internal migrants providing financial aid for dependents. With global travel frozen, many have been stuck in place.

Remittances are expected to be hit the hardest in Europe and central Asia, dropping around 28 percent.

The World Bank says remittance rates could recover by next year, jumping to around $470 billion, although there will still be risks present.