2021 would be the second year in a row that remittance flows to low- and middle-income countries – excluding China – exceed the sum of foreign direct investment and foreign development assistance. Photo: Reuters.
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Remittances to low- and middle-income countries will grow 7.3% in 2021 globally, to around 589 billion dollars, with a notable boost from Latin America and the Caribbean, which registers a year-on-year growth of 21.6% and a new maximum 126 billion annually, according to the latest World Bank report.
According to the report on migration and development published this Wednesday by the WB, In the list of the five economies that receive the most remittances in the world are Mexico, the Philippines, Egypt, India and China.
2021 would be the second year in a row that remittance flows to low- and middle-income countries – excluding China – exceed the sum of foreign direct investment and foreign development assistance, revealing the importance of remittances as a means of sustenance for households to cover their basic needs in times of economic difficulties.
“Migrant remittance flows have greatly complemented government cash transfers in support of families who suffered hardships during the crisis,” said Michal Rutkowski, global director of the Department of Labor and Social Protection Global Practices of the World Bank.
In 2020, the decline in remittances due to the pandemic was 1.7%, but the scenario in 2021 is one of recovery. The official recommended that “facilitating these shipments to offer relief from household budget difficulties should be a key component of government policies.”
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Behind the strong growth in remittances in Latin America and the Caribbean are the Middle East and North Africa (+ 9.7%) compared to 2020. Then come South Asia (+ 8%), Sub-Saharan Africa (+ 6.2%), and Europe and Central Asia (+ 5.3%). In East Asia and the Pacific, remittances fell by around 4%, excluding China, which registered an increase of 1.4%, according to the agency.
The largest remittance senders in the world include the United States, the United Arab Emirates, Saudi Arabia and Switzerland. Worldwide, The report expects growth of 2.6% in 2022, and 4.4% specifically for Latin America, a decline that would respond to the poor growth prospects in the United States, the country from which most remittances are sent to the nations of the region.
In some countries with smaller economies, the value of remittances represents more than 20% of gross domestic product. Among them are El Salvador, with 26.2% of its GDP; Honduras, with 26.6%, and Guatemala, with 18%, according to the World Bank.
Mexico, the main recipient of remittances in Latin America, accounted for 42% of total remittances to the region, with 52.7 billion dollars. According to the World Bank, in addition to the pandemic, Hurricanes Grace and Ida motivated the sending of cash to Mexico and Central America, as well as a significant growth of migrants seeking to reach the north in search of work.
The Latin American economy was hit hard by the pandemic and GDP fell by nearly 7% in 2019 to levels not seen in more than 100 years. Although multilateral organizations project that this year will end with a reactivation of around 6%, they cut activity in half for next year mainly due to the threat of new variants of coronavirus and fears of a re-outbreak.
(With information from AP and France 24)
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