Remittances Rebound After Recession
The worst is over, but the outlook remains grim. This seemed to be the general storyline for economic activity in developed countries during 2010 and is largely true for remittance flows as well. The World Bank expects remittances to rebound by 6 percent to US$325 billion in 2010 after dropping 5.5 percent in 2009.
During 2008 and 2009, the global economic crisis took an uneven toll on migrants around the world, and as a result, remittance flows responded differently across world regions. Remittance flows continued to increase to the Southern and Eastern Asian countries that have large migrant populations living in gulf countries like Saudi Arabia, a region less affected by the economic downturn.
Issue No. 6 of Top Ten of 2010
By contrast, Latin American and Caribbean countries with large diaspora populations in the United States and Spain — two of the most severely affected countries — saw remittance flows contract after years of sustained growth.
In 2010, remittances to South and East Asia continued to grow and are estimated to have increased by 10.3 percent and 6.4 percent, respectively, according to the World Bank. India, China, the Philippines, and Bangladesh were among the top recipients.
In Latin America and the Caribbean, the free fall of remittances stopped, but the recovery has been tepid. Compared to 2009, remittances to the region increased slightly, but they are still below prerecession levels.
The research arm of BBVA Bancomer — a large bank heavily involved in remittance transactions throughout Latin America — estimates that 2010 remittances to Mexico will be between 2 percent lower and 2 percent higher than 2009. The World Bank expects a 2 percent increase for Mexico in 2010, from US$22.1 billion to about US$22.6 billion. According to the Central Bank of Mexico, the total value of remittances to Mexico fell faster than the number of remittance transactions, indicating that many migrants continued to send money during the crisis but less of it.
Another notable, if expected, trend during 2010 was the rise in remittances to countries in the wake of natural disasters. Remittances to Haiti will likely be 20 percent higher in 2010 because of the diaspora's tremendous financial support following a devastating earthquake in January. And Pakistan experienced a surge in remittances after floods devastated much of the country last summer (see Issue #10: Natural Disasters in Haiti and Pakistan Highlight Diaspora Response).
It is well known that remittances flows depend more on the accumulated stock of migrants than the flow. However, after two years of slowing global migration, it is not clear if remittances will return to their precrisis growth rates in the years ahead. Still, the World Bank projects remittances will grow 6.2 percent in 2011 and 8.1 percent in 2012.
Question: How will remittances fare as the jobs crisis drags out in the United States and parts of Europe?
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