Worldwide, remittance flows expected to reach $440 billion by end of the year
11th November 2010: Migrant workers were a great source of external financing to developing countries during the recent global financial crisis, a new report by the World Bank has revealed.
The “Migration and Remittances Factbook 2011” shows that remittances to developing countries are expected to reach $325 billion by the end of this year, up from $307 billion in 2009. Worldwide, remittance flows are expected to reach $440 billion by the end of this year.
The World Bank estimates that, after recovering by the end of this year, recorded remittances to developing countries will rise further in 2011 and 2012, possibly exceeding $370 billion in two years’ time.
“Remittances are a vital source of financial support that directly increases the income of migrants’ families,” said Hans Timmer, director of development prospects at the World Bank. “Remittances lead to more investments in health, education, and small business. With better tracking of migration and remittance trends, policy makers can make informed decisions to protect and leverage this massive capital inflow which is triple the size of official aid flows,” Timmer said.
The top remittance sending countries in 2009 were the United States, Saudi Arabia, Switzerland, Russia, and Germany. Worldwide, the top recipient countries in 2010 are India, China, Mexico, the Philippines, and France. As a share of GDP, however, remittances are more significant for smaller countries—more than 25 percent in some countries.
While high-income countries remain the main source of remittances, migration between developing countries is larger than that from developing countries to high-income countries belonging to the Organisation for Economic Cooperation and Development (OECD).
Regionally, there is significant variation across developing regions, with larger-than-expected falls in remittances to Europe and Central Asia, Latin America and the Caribbean, the Middle East and North Africa, and Sub-Saharan Africa regions in 2009. Flows to South Asia in 2009 grew more than expected, and those to East Asia and Pacific rose modestly.
“Remittances in 2008 and 2009 became even more of a lifeline to poor countries, given the massive decline in private capital flows sparked by the crisis,” said Dilip Ratha, manager of the migration and remittance unit at the World Bank. “However, high unemployment is prompting many migrant-receiving countries to tighten immigration quotas, which would probably slow the growth of remittance flows. Also uncertain currency movements can have unpredictable effects on remittance flows,” Ratha added.
In addition to crisis-related risks, there are major structural and regulatory changes in the global remittance market. Regulations to combat financial crime have become a roadblock to the adoption of new mobile money transfer technologies for cross-border remittances. “There is urgent need to reassess regulations for remittances through mobile phones and mitigate the operational risks,” Ratha said.
According to the Factbook 2011, the top migrant destination country is the United States, followed by Russia, Germany, Saudi Arabia, and Canada. The top immigration countries relative to population are Qatar (87 percent), Monaco (72 percent), the United Arab Emirates (70 percent), Kuwait (69 percent), and Andorra (64 percent). Mexico–United States is expected to be the largest migration corridor in the world this year, followed by Russia–Ukraine, Ukraine–Russia, and Bangladesh–India.