A Western Union sing in Munich, Germany | Photo: Alexander Pohl/imago
A Western Union sing in Munich, Germany | Photo: Alexander Pohl/imago

The amount of money sent home by migrants to low- and middle-income countries is projected to increase more than expected this year thanks to a strong economic recovery in the United States and Europe. That's according to a recent World Bank report.

So-called remittances, or foreign exchange transactions, are expected to have grown by 7.3% to $589 billion (€520 billion) by the end of this year, the World Bank said in a report published on November 17. In comparison, the pandemic year 2020 saw a 1.7% decline as the anti-coronavirus measures tipped the world economy into a recession.

"Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis," the World Bank's Michal Rutkowski was quoted in an online statement.

According to the report, Latin America and the Caribbean will see the greatest increase with more than 21% -- almost triple the global average -- with Mexico taking some 42% of the regional haul. Money sent back to countries in the Middle East and northern Africa (9.7%) as well as South Asia (8%) are also projected to grow above-average.

Given that remittances are expected to surpass the sum of foreign direct investment (FDI) and overseas development assistance (ODA) as they did last year, according to the report, they provide "a critical lifeline by supporting household spending on essential items such as food, health, and education during periods of economic hardship in migrants' countries of origin."

Read more: Global poor hit as COVID-19 causes drop in remittances

Strong EU economy boosts remittances

Money sent back by migrants to eastern Europe and central Asia, meanwhile, should rise by 5.3%, or $67 billion this year. That's "due to stronger economic activity in the European Union and surging energy prices," the authors of the report wrote.

Migrant cash sent back to sub-Saharan countries in Africa, meanwhile, will be close to the global average, according to the projections in the report (6.2%, or $62 billion). In The Gambia, for instance, the value of remittances as a share of GDP is a staggering 33.8%. Remittances to East Asia and the Pacific, on the other hand, are forecast to fall 4% this year to 1.4% ($131 billion). If China, which is excluded in the entire report, were included, however, the yearly flow there would increase by 1.4%.

In 2022, global remittances are expected to grow by 2.6%, according to the World Bank. However, a resurgence of COVID-19 cases and the mobility restrictions that could come with it pose a risk to remittance flows to developing countries. Canceling economic stimulus packages in developed countries could also weaken remittance flows.

"The surprising pace of recovery is welcome news," said Dilip Ratha, lead author of the report and head of the Global Knowledge Partnership on Migration and Development (KNOMAD). "To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement."

Also read: Migrant worker in Italy: 'If you told someone in Africa [how we are living] they wouldn't believe you'

 

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