US: Remittances to recover modestly after two years of decline – WB report

Washington, US (PANA) - Remittances to low- and middle-income countries are on course to recover in 2017 after two consecutive years of decline, said the latest edition of the World Bank’s Migration and Development Brief, released Tuesday.

The Bank estimates that officially recorded remittances to developing countries are expected to grow by 4.8 percent to US$450 billion for 2017. Global remittances, which include flows to high-income countries, are projected to grow by 3.9 percent to US$596 billion, the report said.

According to the World Bank, the recovery in remittance flows was driven by relatively stronger growth in the European Union, Russian Federation, and the United States. As a result, those regions likely to see the strongest growth in remittance inflows this year are Sub-Saharan Africa, Europe and Central Asia, and Latin America and the Caribbean.

In the Gulf Cooperation Council (GCC) countries, fiscal tightening, due to low oil prices, and policies discouraging recruitment of foreign workers, will dampen remittance flows to East and South Asia.

Among major remittance recipients, India retains its top spot, with remittances expected to total US$65 billion this year, followed by China ($61 billion), the Philippines ($33 billion), Mexico (a record $31 billion), and Nigeria (($22 billion).

In keeping with an improving global economy, the report said remittances to low- and middle-income countries were expected to grow modestly by 3.5 percent in 2018, to $466 billion. Global remittances will grow by 3.4 percent to $616 billion in 2018.

The global average cost of sending $200 remained stagnant at 7.2 percent in the third quarter of 2017.This was significantly higher than the Sustainable Development Goal (SDG) target of 3 percent.

Sub-Saharan Africa, with an average cost of 9.1 percent, remains the highest-cost region. Two major factors contributing to high costs are exclusive partnerships between national post office systems and any single money transfer operator (MTO), which stifles market competition and allows the MTO to raise remittance fees, as well as de-risking by commercial banks, as they close bank accounts of MTOs, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime.

“Remittances are a lifeline for developing countries; this is particularly true following natural disasters, such as the recent earthquakes in Mexico and the storms devastating the Caribbean. It is imperative for the global community to reduce the cost of remitting money, by eliminating exclusivity contracts, especially in the high-income OECD countries. There is also an urgent need to address de-risking behavior of global banks,” said Dilip Ratha, lead author of the Brief.

After two years of decline, remittances to the Middle East and North Africa region are expected to grow by 4.6 percent to $51 billion this year, largely driven by strong flows to Egypt, the region’s largest recipient, in response to the devaluation of the Egyptian pound. The growth outlook is, however, dampened by lower growth in the GCC due to oil production cuts and fiscal consolidation. Remittances to the region will grow by 2.9 percent to $53 billion in 2018.

Buoyed by improved economic activity in high-income OECD countries, remittances to Sub-Saharan Africa are projected to grow by a robust 10 percent to $38 billion this year. The region’s major remittance receiving countries, Nigeria, Senegal and Ghana, are all set for growth.

The region is also host to a number of countries where remittances account for a significant share of GDP, including Liberia (26 percent), Comoros (21 percent), and the Gambia (20 percent). The report indicated that remittances will grow by a moderate 3.8 percent to $39 billion in 2018.  

In a special feature on forced and voluntary return migration, the Brief noted that the surge in refugees, asylum seekers and undocumented migrants arriving in Europe was slowing. Even as European countries grapple with refugee and migrant flows, low- and middle-income countries continue to host more than 90 percent of refugees.
-0- PANA AR 3Oct2017

03 october 2017 18:20:58

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