Remittance flow set to surge 7.8% to $436 billion in 2014

Middle East sees 2% drop in 2013 as India stays top recipient at $70 billion

Remittance flows to developing countries will see an increase of 7.8 per cent to $436 billion in 2014 with India staying as the top global recipient of money sent by migrants by recording $70 billion in 2013.

Global remittance flows, including to higher income countries, are estimated at $542 billion in 2013, and could rise to $680 billion by 2016, according to the World Bank’s latest issue of the Migration and Development Brief.

India remains the largest recipient of officially recorded remittances in the world with $70 billion in 2013. Other large recipients include china ($60 billion), the Philippines ($25 billion), Mexico ($22 billion), Nigeria ($21 billion) and Egypt ($17 billion). — Reuters

Growth in remittance flows to developing countries is expected to accelerate to an annual average of 8.4 per cent over the next three years to $516 billion in 2016.

Remittances to developing countries, with the exception of some in the Middle East region, are estimated to have risen 3.5 per cent to $404 billion in 2013 compared with 2012, said the bank report.

In the Middle East and North Africa, or Mena region, remittances are estimated to have fallen by two per cent in 2013, as a drop in remittances to Egypt more than offset modest growth in the rest of the region.

“Despite oil prices remaining firm and underpinning the economies of the GCC countries, deportations from Saudi Arabia and other disruptions are hurting remittance flows. The Government of Saudi Arabia deported over 370,000 migrants since the beginning of November 2013, when concerted efforts to strengthen law enforcement were initiated. This is likely to have a major impact on remittance flows from Saudi Arabia to those countries whose nationals are most affected, including Bangladesh, Ethiopia, Egypt and Yemen,” the World Bank report said.

The projections of remittances are prepared based on the outlook for world GDP, bilateral matrices of migrant stocks and remittances, and the recent historical growth rate of remittances.

Growth in remittances to the South Asia Region (SAR) is projected to moderate to 2.3 per cent in 2013, after averaging 14.1 per cent in 2011 and 2012. The report said remittances to India rose by only 1.7 per cent to reach $70 billion in 2013, as the impetus from the depreciation of the Indian rupee during much of 2013 appears to have attracted inflows mainly for investment purposes, as indicated by the surge in non-resident Indian deposits.

However, India remains the largest recipient of officially recorded remittances in the world. Other large recipients include China ($60 billion), the Philippines ($25 billion), Mexico ($22 billion), Nigeria ($21 billion) and Egypt ($17 billion).

In Bangladesh, the third largest recipient of remittances in the SAR region, inflows decreased by 2.4 per cent, largely due to the combined dampening effect of fewer migrants finding jobs overseas (lowering net migration), the appreciation of the Bangladeshi taka, and difficulties in resolving the status of migrant workers in GCC countries.

Growth in remittance flows to Nepal and Sri Lanka, which were equivalent to 25 per cent and 10 per cent of the GDP, respectively, was more robust. Remittances to Pakistan grew rapidly in the second half of 2013, and continue to provide essential support to the balance of payments, and they were equivalent to 284 per cent of international reserves in 2013, the World Bank report said. The main driver of growth in remittance flows is the expansion of incomes in the destination countries. Exchange rate movements of world currencies also contribute significantly to the outlook for remittances expressed in US dollars, the report said.

Rising anti-immigrant sentiment in many developed destination countries, as evident from deportation of migrants, is a growing concern, the World Bank observed.

“Saudi Arabia deported more than 370,000 migrants in the five months since November 2013, many of whom come from Ethiopia, Egypt and Yemen. In the US, over 368,000 people were deported in 2013 (mostly migrants seeking entry into the US and apprehended at the border), with Mexico and Central American countries the main places of origin,” said the report.

— issacjohn@khaleejtimes.com