Remittances to low- and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline, says the World Bank’s latest Migration and Development Brief.
The Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016.
The stronger than expected recovery in remittances is driven by growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble.
Global remittances, including flows to high-income countries, grew 7 percent to $613 billion in 2017, while officially recorded remittances to low-and-middle-income countries jumped up 8.5 percent to reach $466 billion. The rebound was also helped by higher oil prices and a strengthening of the Euro and the Ruble, added the report.
But dip or no dip, the Indian diaspora tops the charts when it comes to sending money home. Remittances to India picked up sharply by 9.9 percent in 2017 to reach about $69 billion, reversing the previous year’s dip. In fact, India, the world’s largest remittance recipient, had led the decline with remittance inflows amounting to $62.7 billion in 2016, a decrease of 8.9 percent over $68.9 billion in 2015. The bad news is that we are still short of the $70.4 billion received in 2014. The World Bank has previously noted that although remittances as a share of GDP was not particularly significant for India – averaging around 2 percent – there were subnational variations in the impact of remittances. For Kerala, as it had pointed out, remittances were estimated at 36.3 percent of the net state domestic product and contributed significantly to household consumption.
The South Asia region at large posted a moderate 5.8 percent jump in remittances last year, amounting to $117 billion. “Robust growth in South Asia mainly reflects strengthening growth in India as the effects of temporary policy driven disruptions (demonetization and a new tax on goods and services) fade,” said the report. However, flows to Pakistan and Bangladesh were both largely flat in 2017, and Sri Lanka saw a small decline of less than 1 percent. Meanwhile, the biggest rebound in remittances last year was seen in Europe and Central Asia region (20.9 percent).
The other countries that ranked high in the Top 5 in receiving remittances are China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion) and Nigeria ($22 billion). However, as a share of GDP for 2017, the top recipients were the smaller countries – the Kyrgyz Republic, Tonga, Tajikistan, Haiti and Nepal.
The projections for 2018 are broadly optimistic. The upsurge in remittances is expected to continue on the back of stronger economic conditions in advanced economies (particularly the US) and an increase in oil prices that should have a positive impact on the Gulf Cooperation Council nations – Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. Remittances to the South Asia region are pegged to grow by 2.5 percent to $120 billion. Global remittances are expected to post a better growth of 4.6 percent to $642 billion in 2018.