At $80 Billion, India is Top Recipient of Remittances: World Bank
India will remain world’s top recipient of remittances sending a USD 80 billion back home, the World Bank reports.
advertisement
India will retain its position as the world's top recipient of remittances this year with its diaspora sending a whopping $80 billion back home, the World Bank said in a report Saturday, 8 December.
India is followed by China ($67 billion), Mexico and the Philippines ($34 billion each) and Egypt ($26 billion), according to the global lender.
The Bank estimates that officially-recorded remittances to developing countries will increase by 10.8 percent to reach $528 billion in 2018. This new record level follows a robust growth of 7.8 percent in 2017.
Global remittances, which include flows to high-income countries, are projected to grow by 10.3 percent to $689 billion, it said.
Over the last three years, India has registered a significant flow of remittances from $62.7 billion in 2016 to $65.3 billion 2017. In 2017, remittances constituted 2.7 percent of India's GDP, it said.
The upsurge is driven by stronger economic conditions in advanced economies, particularly the US, and the increase in oil prices having a positive impact on outflows from some GCC countries such as the UAE, which reported a 13 percent growth in outflows for the first half of 2018.
Bangladesh and Pakistan both experienced strong upticks of 17.9 percent and 6.2 percent in 2018, respectively, the Bank said.
For 2019, it is projected that remittances growth for the region will slow to 4.3 percent due to a moderation of growth in advanced economies, lower migration to the GCC and the benefits from the oil price spurt dissipating.
As global growth is projected to moderate, future remittances to low- and middle-income countries are expected to grow moderately by four percent to reach $549 billion in 2019. Global remittances are expected to grow 3.7 percent to $715 billion in 2019.
The brief notes that the global average cost of sending $200 remains high at 6.9 percent in the third quarter of 2018. Reducing remittance flows to three percent by 2030 is a global target under Sustainable Development Goal (SDG) 10.7.
"Even with technological advances, remittances fees remain too high, double the SDG target of 3 percent. Opening up markets to competition and promoting the use of low-cost technologies will ease the burden on poorer customers," said Mahmoud Mohieldin, Senior Vice President for the 2030 Development Agenda, United Nations Relations, and Partnerships at the Bank.
The average cost of remitting in South Asia was the lowest at 5.4 percent, while Sub-Saharan Africa continued to have the highest at 9 percent.
No solutions are yet in sight for practices that drive up costs, such as de-risking action of banks, which lead to closure of bank accounts of remittance service providers.
Another persistent factor that keeps fees high is the exclusive partnership between national post office systems and any single money transfer operator, as it allows the operator to charge higher fees to poorer customers dependent on post offices, the Bank said.
"The future growth of remittances is vulnerable to lower oil prices, restrictive migration policies, and an overall moderation of economic growth.
"Remittances have a direct impact on alleviating poverty for many households, and the World Bank is well positioned to work with countries to facilitate remittance flows," said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)