Why in news?
The report on remittances for 2018 was released in the latest edition of the World Bank’s Migration and Development Brief.
What are the highlights?
- India - India will retain its position as the world's top recipient of remittances this year with its diaspora sending a USD 80 billion back home.
- India is followed by China (USD 67 billion), Mexico and the Philippines (USD 34 billion each) and Egypt (USD 26 billion).
- Over the last three years, India has registered a significant flow of remittances, from USD 62.7 billion in 2016 to USD 65.3 billion 2017.
- In 2017, remittances constituted 2.7% of India’s GDP.
- Global - Officially-recorded remittances to developing countries will increase by 10.8% to reach USD 528 billion in 2018.
- This new record level follows a robust growth of 7.8% in 2017.
- Global remittances, which include flows to high-income countries, are projected to grow by 10.3% to USD 689 billion.
- South Asia - Remittances to South Asia are projected to increase by 13.5% to USD 132 billion in 2018.
- This is a stronger pace of growth than the 5.7% growth seen in 2017.
- The upsurge is driven by stronger economic conditions in advanced economies, particularly the US.
- Also, the increase in oil prices has a positive impact on outflows from some Gulf Cooperation Council (GCC) countries.
- This, notably, include the UAE which reported a 13% growth in outflows for the first half of 2018.
- Bangladesh and Pakistan both experienced strong upticks of 17.9% and 6.2% in 2018, respectively.
- But for 2019, it is projected that remittances growth for the South Asian region will slow to 4.3% due to -
- moderation of growth in advanced economies
- lower migration to the GCC
- the benefits from the oil price spurt dissipating
- Future - The future growth of remittances is vulnerable to lower oil prices, and restrictive migration policies.
- Also, the global economic growth is projected to moderate in the coming year.
- So future remittances to low- and middle-income countries are expected to grow only moderately by 4% to reach USD 549 billion in 2019.
- Global remittances are expected to grow 3.7% to USD 715 billion in 2019.
- Remittance cost - The report highlights that even with technological advances, remittances fees remain too high.
- The global average cost of sending USD 200 remains high at 6.9% in the third quarter of 2018.
- The average cost of remitting in South Asia was the lowest at 5.4%, while Sub-Saharan Africa continued to have the highest at 9%.
- Notably, reducing remittance flows to 3% by 2030 is a global target under Sustainable Development Goal (SDG) 10.7.
- Increasing the volume of remittances is also a global goal under the proposals for raising financing for the SDGs.
What lies ahead?
- Remittances have a direct impact on alleviating poverty for many households.
- World Bank has the mandate and scope to work with countries to facilitate this process.
- Finding solutions to address the factors that drive up remittance costs is thus essential.
- Opening up markets to competition and promoting the use of low-cost technologies will ease the burden on poorer customers.
Source: Financial Express
