World Bank Predicts 7.8% Growth in Remittances to Developing Economies in 2014

• Nigeria is largest recipient in sub-Saharan Africa with $21bn in 2013

world-bank1The World Bank Group has predicted that remittance flow to developing countries will rise 7.8 per cent to $436 billion in 2014 from the 2013 volume of $404 billion. This forecast is contained in the bank’s latest issue of the Migration and Development brief released at the weekend in Washington DC, United States, during the 2014 Spring Meetings. The expected increase in flows to developing countries this year, according to the World Bank, will be maintained in the next few years despite deportations of international migrants from some host countries, adding that remittances will rise to $516 billion in 2016.

The brief puts global remittances, including those to high-income countries, at an estimate of $581 billion in 2014 from $542 billion in 2013, adding that it may rise to $681 billion in 2016. For sub-Saharan Africa, flows grew by 3.5 per cent in 2013 to reach $32 billion, with Nigeria accounting for about $21 billion or 65.6 per cent of flows to the region. The flows to the region are forecast to rise to $41 billion in 2016. The strong showing of Nigeria in the league of high remittance-recipient countries has encouraged its economic authorities to plan a Diaspora bond to mobilise savings and boost financing for development. The World Bank noted that remittances had increasingly become a key source of external resource flows for developing countries, far exceeding official development assistance from the advanced economies.

It equally maintained that remittances had become more stable than private debt and portfolio equity flows in recent times. “Remittances have become a major component of the balance of payments of nations. India led the chart in remittance flows, receiving $70 billion last year, followed by China with $60 billion, the Philippines with $25 billion, Mexico with $22 billion, and Nigeria with $21 billion. “There is no doubt that these flows act as an antidote to poverty and promote prosperity. Remittances and migration data are also barometers of global peace and turmoil,” said Senior Vice-President and Chief Economist at the World Bank. The World Bank  expert added that this is what is making the World Bank’s Global Knowledge Partnership on Migration and Development (KNOMAD) initiative organise, analyse and make available these data.

The Bretton Woods Institution equally noted that while the medium term outlook for remittances remained strong, downside risks loomed mainly from migrant’s return to their home countries as a result of conflict or deportation from host countries. 2013 saw the intensification of deportations, with more than 370,000 migrants sent back to their home countries from Saudi Arabia alone in five months since November 2013. In the US, over 368,000 people, mostly migrants seeking entry into the US, were deported to their home countries in Latin America and the Caribbean, particularly Mexico, El Salvador, Guatemala and Honduras. However, remittance flows in 2013 were generally robust in all regions except Latin America and the Caribbean (LAC), and the Middle East and North Africa (MENA), where the two largest remittance-recipient countries – Mexico and Egypt- saw declines in remittance inflows due in part to removals and deportations from the US and Saudi Arabia, respectively.

India remained in the top spot, with $70 billion in remittances in 2013. Other large recipients were China ($60 billion), the Philippines ($25 billion), Mexico ($22 billion), Nigeria ($21 billion),Egypt figure was ($17 billion) Pakistan ($15 billion), Bangladesh ($14 billion), Vietnam ($11 billion), and Ukraine ($10 billion). In terms of remittances as share of GDP, the top recipients were Tajikistan (52 per cent), Kyrgyz (31 per cent), Nepal and Moldova (both 25 per cent, Samia and Lesotho (both 23 per cent), Armenia and Haiti (both 21 per cent), Liberia (20 per cent) and Kosovo (17 per cent). “In addition to the large annual flows of remittances, migrants living in high income countries are estimated to hold savings in excess of $500 billion annually. These savings represent a huge pool of funds that developing countries can do much more to tap into,” said Manager of the Migration and Remittances Team at the World Bank’s Development Prospects Group, Dilip Ratha.

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