The latest Migration and Development Brief from the World Bank projects that global remittances will decline by 19.9% in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7% to $445 billion. The fall in FDI is expected to be much larger.
South Asia is projected to see 22.1% decline in remittances. It is expected to see mild recovery in 2021 but medium-term downside risks persist. The deceleration of remittance inflows is due to COVID-19 outbreak and oil price decline.
- In India, remittances are projected to fall by about 23% in 2020, to $64 billion, from a 5.5% growth and receipts of $83 billion seen in 2019.
- Remittances to Nepal are expected to decline by 14%, dropping to about US$7 billion in 2020.
- Remittances to Sri Lanka are expected to decline by 19%, dropping to about US$5.5 billion.
- In Bangladesh, remittances are projected at $14 billion for 2020, a likely fall of about 22%.
- In Pakistan, the projected decline is also about 23%, totaling about $17 billion, compared with a total of $22.5 billion in 2019, when remittances grew by 6.2%.
The COVID-19 presents particular challenges:
- Economic crisis could be longer, deeper and more pervasive than the recent growth estimates. The decline in fuel prices and lockdowns have affected sectors that depend on migrant workers in host countries. Migrant workers are more vulnerable to employment and wages losses in host countries.
- It has disproportionately affected food and hospitality, retail and wholesale, tourism and transport, and manufacturing.
- Developed countries that depend on migrant workers in agriculture sector will face labor shortages when farming season begins.
- Cross-sectoral mobility of workers is affected. It is hard for low-skilled migrant workers to move to other sectors. During the global financial crisis in 2009, many migrant workers moved from construction to agriculture and retail. Now, health and information technology require high and specific skills, which is missing among many migrant workers.
- Internal migrants without access to housing, basic water and sanitation, health facilities, or social safety nets are more vulnerable to the crisis, especially lockdowns, travel bans, and social distancing measures.
