India, with the world's largest emigrant stock of 14 million people, will remain at the top attracting about $71 billion in remittances
Remittances by international migrants from developing countries are on course for strong growth this year, while at the same time forced migration due to violence and conflict has reached unprecedented levels, says the World Bank's latest issue of Migration and Development Brief, released today.Officially recorded remittances to developing countries are expected to reach $435 billion this year, an increase of 5% over 2013. The growth rate this year is substantially faster than the 3.4% growth recorded in 2013, driven largely by remittances to Asia and Latin America.
Remittances to developing countries will continue climbing in the medium term, reaching an estimated $454 billion in 2015.
Global remittances, including those to high-income countries, are estimated at $582 billion this year, rising to $608 billion next year.
Remittances remain an especially important and stable source of private inflows to developing countries, as they bring in large amounts of foreign currency that help sustain the balance of payments. In 2013, remittances were significantly higher than foreign direct investment (FDI) to developing countries (excluding China) and were three times larger than official development assistance.
"Remittances to developing countries grew this year by 5%. Remittance inflows provided stable cover for substantial parts of the import bill for such countries as Egypt, Pakistan, Haiti, Honduras, and Nepal. India and China lead the chart with projected remittance inflows of, respectively, $71 and $64 billion in 2014. In addition, India and the Philippines benefit from having migrants with the most diverse destination spread, thereby creating buffers against regional shocks. Given the growing importance of this sector, the World Bank's Migration and Development Brief has become an essential tool for global development policy experts," said Kaushik Basu, Senior Vice President and Chief Economist of the World Bank Group.
The brief notes that the global average cost of sending remittances continued its downward trend in the third quarter of 2014, falling to 7.9% of the value sent, compared to 8.9% a year earlier. However, the cost of sending money to Africa remains stubbornly high, exceeding 11%.
Remittance flows are expected to grow robustly to almost all regions of the developing world, except Europe and Central Asia, where the conflict in Ukraine and associated sanctions are contributing to an economic slowdown in Russia, home to a large number of migrants from the region. The East Asia and Pacific and South Asia regions will continue to attract the largest remittance flows.
India, with the world's largest emigrant stock of 14 million people, will remain in the top spot this year, attracting about $71 billion in remittances. Other large recipients are China ($64 billion), the Philippines ($28 billion), Mexico ($24 billion), Nigeria ($21 billion), Egypt ($18 billion), Pakistan ($17 billion), Bangladesh ($15 billion), Vietnam ($11 billion) and Ukraine ($9 billion).
As a share of GDP (2013), the top recipients of remittances were Tajikistan (42%), Kyrgyz Republic (32%), Nepal (29%), Moldova (25%), Lesotho and Samoa (24% each), Armenia and Haiti (both 21%), the Gambia (20%) and Liberia (18%).
In a special analysis on forced migration, the brief notes that forced migration due to conflict is at its highest level since World War II, affecting more than 51 million people. An additional 22 million people have been forced to move due to natural disasters, bringing the total affected by forced migration to at least 73 million, according to the latest available data.
"Despite the encouraging outlook for remittance flows, the circumstances of many migrants are troubling. With so many people on the move against their will and many others undertaking desperate and dangerous journeys, it is clear that more effort is needed to make migration safer and cheaper by exploring economically viable policy options," said Dilip Ratha, Lead Economist, Migration and Remittances, at the World Bank's Development Prospects Group and Head of the Global Knowledge Partnership on Migration and Development (KNOMAD).
Forced migration is typically viewed as a humanitarian issue but affects growth, employment and public spending for both origin and destination countries. The issue needs to be examined also through a development lens, says the brief.
Forced migration is a major challenge in several regions. In developing Europe and Central Asia, 1 million people in Ukraine have been displaced, while the high-income countries of Europe are receiving record numbers of asylum seekers. Applications to the entire region rose to over 480,000, an increase of 68% from 2009.
Pakistan and Iran top the world list of refugee host countries, as millions of people from neighboring Afghanistan remain displaced after more than 35 years of conflict. At the end of 2013, nine out of 10 refugees were being hosted in developing countries.
The war in Syria has displaced half the country's population, with 3 million refugees crossing borders and 6.5 million people displaced internally. Most Syrian refugees have fled to neighboring Lebanon, Turkey and Jordan, joining millions of Iraqi and Palestinian refugees already there. In 2014, Syrians overtook Afghans as the second largest refugee group, outnumbered only by Palestinian refugees.
In Sub-Saharan Africa, internal conflict (including renewed instability in South Sudan and Boko Haram activities in Nigeria) together with persistent drought in the Horn of Africa, are resulting in increased forced migration in the region.
Regional Remittance Trends
Strong growth in remittances continues to support macroeconomic stability and economic growth in the East Asia and the Pacific (EAP) region. Remittances to the region are projected to increase by 7% this year, faster than any other region, to reach $122 billion. China and the Philippines are the region's largest recipients, in value terms, but the smaller Pacific islands are most dependent on remittances, where they are a significant share of GDP. Remittances to the region are expected to grow by 4.9% in 2015 to exceed $127 billion.
Weakening economic growth in Russia, the ruble depreciation, and sanctions imposed on Russia by western countries as a result of the conflict in Ukraine, are expected to slow the growth of remittances to the Europe and Central Asia (ECA) region this year to 2.2% (from 7.5% in 2013), bringing remittance flows to $49 billion in 2014. Russia is the largest source of remittances to countries in the region, and Ukraine is ECA's largest remittance-recipient country. Dependency on remittances is high in several ECA countries, particularly in Tajikistan, Kyrgyz Republic and Moldova. Remittances to the region are expected to remain broadly unchanged in 2015.
Remittance flows to the Latin America and the Caribbean (LAC) region are likely to bounce back this year, following a weak 2013. Recovery in the United States will benefit Mexico, El Salvador, Guatemala and Nicaragua, which together account for more than half of the remittance flows to the region. In contrast, high unemployment in Spain is negatively impacting remittances to Bolivia, Colombia, Paraguay, and Peru. Intraregional remittances from Chile will continue on an upward trend. Remittances to the region are expected to increase by 5% this year, compared to 1% last year, to $64 billion, rising to $67 billion in 2015.
In the Middle East and North Africa (MENA) region, officially recorded remittances are on course to expand moderately this year, rising by 2.9% to reach $51 billion in 2014. Flows remain volatile, especially in the three largest recipient countries - Egypt, Lebanon and Morocco. After the sharp fall in flows to Egypt in 2013, remittances are expected to stabilize in 2014, helped by attractive investment opportunities in the planned expansion of the Suez Canal. The ongoing economic crisis and high unemployment rates in Europe will continue to dampen remittances to Morocco, Tunisia and Algeria. Flows to the region are expected to strengthen in the coming years, growing by 4% in 2015 to reach $53 billion.
Remittances to the South Asia region are increasing more robustly this year, accelerating from slower growth in 2013. Although flows to India, the region's largest remittance recipient, will grow modestly by 1.5% in 2014, partial year data point to very strong growth in flows to Pakistan (16.6%), Sri Lanka (12.1%) and Nepal (12.2%). The expansion is being led by flows from the Gulf Cooperation Council countries, where skilled and unskilled workers are finding renewed job opportunities. As a result, the growth rate of remittances to the region is expected to more than double this year to 5.5% (from 2.7% in 2013), boosting volumes to $117 billion in 2014 and rising further to $123 billion in 2015.
Growth in remittances to Sub-Saharan Africa is picking up modestly this year. The importance of remittances varies greatly across the region. Remittances as a share of GDP are most significant to Lesotho, the Gambia, Liberia, Senegal and Cabo Verde. Flows as a share of foreign exchange reserves are highest in Sudan, Senegal, Togo, Mali and Cabo Verde. Remittances to the region are expected to reach $33 billion this year and $34 billion in 2015.
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