The developing world is expected to receive $414 billion in migrant remittances in 2013, an increase of 6.3 percent over the previous year. This is projected to rise to $540 billion by 2016.
Globally, the world’s 232 million international migrants are expected to remit earnings worth $550 billion this year, and over $700 billion by 2016, says the latest issue of the World Bank’s Migration and Development Brief.
The latest estimates reflect recent changes to The World Bank Group’s country classifications, with several large remittance recipient countries, such as Russia, Latvia, Lithuania and Uruguay no longer considered developing countries. In addition, the data on remittances also reflects the International Monetary Fund’s changes to the definition of remittances that now exclude some capital transfers, affecting numbers for a few large developing countries like Brazil.
The top recipients of officially recorded remittances for 2013 are India (with an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), Nigeria ($21 billion), and Egypt ($20 billion). Other large recipients include Pakistan, Bangladesh, Vietnam, and Ukraine.
As a percentage of GDP, the top recipients of remittances, in 2012, were Tajikistan (48 percent), Kyrgyz Republic (31 percent), Lesotho and Nepal (25 percent each), and Moldova (24 percent).
Growth of remittances has been robust in all regions of the world, except for Latin America and the Caribbean, where growth decelerated due to economic weakness in the United States.
Following are some regional highlights:
In South Asia, remittances are noticeably supporting the balance of payments. In Bangladesh, Nepal, Pakistan and Sri Lanka, remittances are larger than the national foreign exchange reserves. All these countries (most notably, Pakistan) have instituted various incentives for attracting remittances. In India, remittances are larger than the earnings from IT exports. With the weakening of the Indian rupee, a surge in remittances is expected as nonresident Indians take advantage of the cheaper goods, services and assets back home. Remittances to India are expected to reach $71 billion in 2013.
In Latin America and the Caribbean, the growth of remittances has been impacted by the U.S. economic situation. In particular, remittances to Mexico have declined again in recent months, presumably because of a lagged effect of the slowdown in migration flows to the US after the global financial crisis.
In the Middle East and North Africa, displacement of people due to conflict has assumed critical proportions, especially as nearly 2 million Syrians have moved to neighboring countries as refugees. The direction of remittances is unclear. In 2010, the last date for which data are available, Syria received over $1.6 billion in remittances. With conflict, more inward remittances are expected to from those already abroad, to help families and friends. However, the recently displaced people are also expected to take funds with them or receive remittances from Syria. On balance, we expect remittances to Syria to rise modestly. Remittances to Egypt have nearly tripled since 2009, to reach $20 billion in 2013. (For comparison, the revenue from Suez Canal is now about one-third of remittances).
The Brief also highlights that the high cost of sending money through official channels continues to be an obstacle to the utilization of remittances for development purposes, as people seek out informal channels as their preferred means for sending money home. The global average cost for sending remittances is 9 percent, broadly unchanged from 2012.
While remittance costs seem to have stabilized, banks in many countries have begun imposing additional ‘lifting’ fees on incoming transfers, including remittances. Such fees can be as high as 5 percent of the transaction value.
Some international banks are also closing down the accounts of money transfer operators because of money laundering and terrorism financing concerns.