India retains rank as world's largest remittance recipient

India retains rank as worlds largest remittance recipient
The UAE remained among the top five markets that sent out remittances in 2015.

Issac John

Published: Thu 14 Apr 2016, 5:11 PM

Last updated: Fri 15 Apr 2016, 8:33 AM

India retained its position as the world's largest recipient of remittances from abroad in 2015 by attracting $69 billion despite experiencing a $1 billion drop from the previous year, the first decline since 2009, the World Bank said on Thursday.
Other large remittance recipients in 2015 were China, with $64 billion, the Philippines ($28 billion), Mexico ($25 billion) and Nigeria ($21 billion).
The World Bank said while remittances to developing countries amounted to $431.6 billion in 2015, an increase of 0.4 per cent over $430 billion in 2014, total global remittances, which include those to high-income countries, contracted by 1.7 per cent to $581.6 billion in 2015, from $592 billion in 2014.
"The growth pace in 2015 was the slowest since the global financial crisis," the Washington-based bank said in its annual report "Migration and Development Brief."
The remittances to India fell short of the $72 billion World Bank estimated for 2015. Traditionally, the GCC is the second-largest source for remittances after North America, accounting for around 35 per cent of the total remittances to India.
In 2014, the total global remittances were $583 billion. The US led the sending markets with $131 billion transferred out, followed by Saudi Arabia ($45 billion), the UAE ($29 billion), the UK ($25 billion) and Germany ($24 billion). Meanwhile, the top five fund-receiving countries are India ($70 billion), China ($64 billion), the Philippines ($28 billion), Mexico ($25 billion) and France ($25 billion). The United States, Saudi Arabia, Germany, Russia and the UAE remain the top five migrant destination countries.
In 2014, remittances from the UAE to India were estimated to be between $12.5 billion and $15 billion.
"Remittances to India, the South Asian region's largest economy and the world's largest remittance recipient, decreased by 2.1 per cent in 2015, to USD 68.9 billion. This marks the first decline in remittances since 2009," the World Bank report said.
"Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries," said Augusto Lopez-Claros, Director of the World Bank's Global Indicators Group.
"However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges including nutrition, access to healthcare and education," Lopez-Claros said.
According to the report, the growth of remittances in 2015 slowed from eight per cent in 2014 to 2.5 per cent for Bangladesh, from 16.7 per cent to 12.8 per cent for Pakistan and from 9.6 per cent to 0.5 per cent for Sri Lanka.
"Slower growth may reflect the impact of falling oil prices on remittances from GCC countries," the report said.
For example, in the fourth quarter of 2015, year-on-year growth of remittances to Pakistan from Saudi Arabia and the UAE were 11.7 per cent and 11.6 per cent respectively, a significant deceleration from 17.5 per cent and 42.0 per cent in the first quarter, the report explained.
Also, deprecation of major sending country currencies -- the euro, the Canadian dollar and Australian dollar --- vis-a-vis the US dollar may be playing a role, it noted.
Remittances to Nepal rose dramatically in response to the earthquake, by 20.9 per cent in 2015 versus 3.2 per cent in 2014.
Remittance flows are expected to recover this year, after a bottoming out in 2015, with growth driven by continued economic recovery in the United States and the Euro Area, and a stabilization of U.S. dollar exchange rates of remittance-source countries. In addition to currency movements, oil prices are a key downside risk to this outlook. Should the price of oil suffer unexpected declines, remittances from Russia and the GCC would be further buffeted.
The global average cost of sending $200 was about 7.4 per cent in the fourth quarter of 2015, down slightly from the previous quarter and 0.6 percentage points below the end of 2014. Sub-Saharan Africa, with an average cost of 9.5 per cent, remains the highest-cost region.
Among geographical regions, remittances to the Middle East and North Africa contracted by 0.9 per cent in 2015, from four per cent growth in 2014, largely due to a decline in inflows to Egypt, the region's largest remittance recipient. However, remittances to the region are expected to grow by 2.6 per cent this year to $51.6 billion, from $50.3 billion in 2015.
Remittances to South Asia grew by two per cent in 2015, down from 4.3 per cent in 2014, due to a contraction in flows to India, the world's largest remittance recipient, and Sri Lanka, despite a spike in remittances to Nepal in response to the earthquake. The region is expected to attract $123.3 billion in remittances this year, compared to $117.9 billion in 2015.

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