In a new Migration and Development brief No.17, the WB economists estimate that remittance flows to developing countries are estimated to reach $351 billion in 2011, up by 8 percent from 2010 level. Their projection show remittance flows to developing countries are expected to grow by 7.3 percent in 2012, 7.9 percent in 2013 and 8.4 percent in 2014, to reach $441 billion by 2014. These forecasted rates of growth are considerably lower than those seen prior to the global financial crisis, when the annual increases in remittances to developing countries averaged 20 percent during 2003-08.
Worldwide remittance flows, including those to high-income countries, are expected to be around $406 billion in 2011 and exceed $515 billion by 2014.
Top remittance receivers
The new estimates show that the top recipients of remittances among developing countries in 2011 are India ($58 billion), followed by China ($57 bn), Mexico ($24 bn), the Philippines ($23 bn), Pakistan ($12 bn), Bangladesh ($12 bn), Nigeria ($11 bn), Vietnam ($9 bn), Egypt ($8 bn) and Lebanon ($8 bn).
In terms of remittances as a share of GDP in 2010, Tajikistan was the top country receiving remittances amounting to 31 percent of GDP. It was followed by Lesotho (29 percent), Samoa (25 percent), Moldova (23 percent), Kyrgyz Rep. (21 percent), Nepal (20 percent), Tonga (20 percent), Lebanon (20 percent), Kosovo (17 percent), and El Salvador (16 percent).
Remittances estimate for 2011
- Remittance flows to Latin America and the Caribbean are estimated to have increased by 7 percent after remaining almost flat in 2010.
- Remittances to East Asia and Pacific region are estimated to have grown by 7.6 percent, to Eastern Europe and Central Asia by 11 percent, and to South Asia by 10.1 percent.
South Asian migrants’ destination
- A significant share (53 percent) of South Asia’s remittances come from the six GCC countries. About 18 percent comes from the US, 12 percent from Western Europe, 11 percent from other high income countries, and 6 percent from developing countries. The figures related to those of 2010.
- Migrant deployments from Bangladesh grew strongly, by 37 percent, in the first three-quarters of 2011 (after registering a 20 percent decline the previous year).
- Remittance flows to India (the largest recipient among developing countries) appear to have been relatively more affected by the weak employment in the US and by the debt crisis in Europe.
Reasons for high inflows
- The depreciation of the currencies of some large receiving countries (including Mexico, India and Bangladesh) created incentives to send remittances to take advantage of the “sale effect” on local currency assets.The higher purchasing power of each dollar of remittances may increase the incentive to remit in order to to take advantage of the higher purchasing power in the home country.
- Flows to countries in Asia were buoyed by high oil prices and increase in remittance outflows from Russia to Central Asia, and from the Gulf Cooperation Council (GCC) countries to South and East Asia.
- Oil driven economic activities and increased spending on infrastructure development are making these destinations attractive for migrants from developing countries.
- Remittances from the GCC countries to Bangladesh and Pakistan (where the GCC countries account for 60 percent or more of overall remittance inflows) grew by 8 percent and 31 percent respectively in the first three quarters of 2011 on a year-on-year basis.
- The persistent unemployment in the EU and the US and debt crisis will adversely affect employment prospects of existing migrants and harden political attitudes toward new immigration.
- Volatile exchange rates and uncertainty about the direction of oil prices also present further risks to the outlook for remittances.
- Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a life line to the poor.
- There is evidence that costs have been falling in high volume remittance corridors, such as from the US to Mexico, UK to India and Bangladesh, and France to North Africa.
Remittance inflows to Nepal
In 2009, remittances accounted for 22.9 percent of GDP and Nepal was the fifth highest receiver. In 2010, it is 20 percent of GDP and sixth highest receiver.
This does not mean that total remittances inflows has gone down. It has definitely gone up. Total remittance inflows in 2010 was $3.468 billion, which is estimated to reach $3.951 billion in 2011. In 2009, it was $2.985 billion. If you look at the y-o-y growth rate of remittance inflows, then it was 16 percent in 2010 and is estimated to be 14 percent in 2011.
Remittance inflows might increase in next year as more workers leave to the GCC countries for employment. I think the construction work in Qatar for World Cup in 2022 will increase demand for Nepali workers. Also, the high price of oil and construction boom in the gulf countries will draw in more migrant workers. These factors might increase remittance inflows to Nepal. Currently, the depreciation of Nepalese rupee against dollar is increasing the size of remittance inflows.
[If this blog post about remittances is not mouth full to you, then check out this blog post based on a comprehensive migration survey in Nepal. If it still isn’t enough, then check this one out! Dig in the data here.]
Remittance flows to South Asia is expected to be $90 billion in 2011 and forecast for 2012, 2013 and 2014 are $97 billion, $105 billion, and $114 billion respectively. More than half of it goes to India.
Remittance flows to LDCs is expected to be $27 billion in 2011 and forecast for 2012, 2013 and 2014 are $29 billion, $32 billion, and $35 billion respectively.