Remittances of migrant workers to their home countries are projected to fall by about 20% this year because of the economic crisis triggered by the novel coronavirus pandemic, the World Bank says.
Global remittances are expected to fall to US$445 billion in 2020, from US$554 billion last year, according to the World Bank. Such a decline would reverse strong growth in remittances in recent years as a robust global economy became increasingly reliant on migrant labor.
The World Bank bases its prediction mostly on a fall in wages and employment of migrant workers. Many currently work in industries experiencing significant layoffs, and in countries hit hard by COVID-19.
“Remittances are a vital source of income for developing countries,” World Bank Group President David Malpass said in a statement.
“The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.”
Even with the decline, these payments are expected to become an even more important source of income in low- and middle-income countries “as the fall in foreign direct investment is expected to be larger (more than 35%),” the World Bank report said.
Dilip Ratha, lead economist for the report, said the payments act as a “lifeline” and a way of “sharing prosperity” with the families who receive them.
“That sort of decline is actually unprecedented in the recorded history,” Ratha told reporters, adding that migration also might decline due to the crisis.
In some countries, payments from workers abroad amount to a quarter or even one-third of GDP, including South Sudan, Haiti, Nepal, Kyrgyz Republic, Tajikistan, Montenegro and Tonga.
Remittance flows are expected to fall most notably in Europe and Central Asia (27.5%), followed by sub-Saharan Africa (23.1%), South Asia (22.1%), the Middle East and North Africa (19.6%), Latin America and the Caribbean (19.3%), and East Asia and the Pacific (13%).
The efforts to contain the spread of COVID-19 are expected to cause a severe global downturn, and there is a substantial risk of continued economic recession well into 2021, the report said.
Immigrants are especially vulnerable to loss of wages since they tend to be concentrated in urban areas and work in service industries hardest hit by the economic shutdown, including food and hospitality, retail and wholesale, tourism and transport, and manufacturing.
And “as the farming season begins in many countries, there are emerging signs of labor shortages in the agriculture sector of industrial countries that rely on migrant workers,” the World Bank said
The report also cautioned that migrants are being left out of programmes governments have implemented to deal with the virus, including access to healthcare, and are also unable to return home due to transportation shutdowns. (Source: CNA)