Dubai: Global remittance flow increased 10.77 per cent last year to $514 billion (Dh1.88 trillion), up from $464 billion (Dh1.70 trillion) in 2011, said a World Bank report.
However, this is about $20 billion lower than the $534 billion projections made by the World Bank in its interim report in November last year.
Of this, remittances to the developing world is estimated to have grown by 5.3 per cent to $401 billion last year, up from $380 billion, according to the World Bank’s Migration and Development report released on Friday.
“Remittance flows to developing countries have more than quadrupled since 2000. Global remittances, including those to high-income countries, are estimated to have reached $514 billion in 2012, compared to $132 billion in 2000,” the report said.
Remittances, the money sent home by migrants, are three times the size of official development assistance and they provide an important lifeline for millions of poor households.
Remittances to developing countries are expected to grow by an annual average of 8.8 percent for the next three years and are forecast to reach $515 billion in 2015.
More than 215 million people, or 3 per cent of the world’s population, live outside their countries of birth while over 700 million migrate within their countries for socio-political and economic reasons.
“Migration and remittances offer a vital lifeline for millions of people and can play a major role in an economy’s take-off,” Kaushik Basu, World Bank’s Chief Economist and Senior Vice President for Development Economics, said in a statement. “They enable people to partake in the global labour market and create resources that can be leveraged for development and growth. But they are also a source of political contention, and for that very reason deserving of dispassionate analysis.”
India topped the list of recipients of officially recorded remittances with $69 billion, followed by China having received $60 billion, the Philippines with $24 billion in the third place and Mexico with $23 billion – taking the fourth place.
Sudhir Kumar Shetty, Chief Operating Officer of the UAE Exchange Centre, told Gulf News that the falling value of the Indian rupee and attractive interest rates on external deposits have helped India attract increased remittances to India.
“Non-resident external deposits in India went up 9.2 per cent in recent months, driven by an 18 per cent decline in the value of Indian rupee that helped drive remittance in to India – while attractive interest rate on external deposits did the rest,” he told Gulf News.
“Besides, new immigration corridors – from southeast Asia such as Indonesia and the Africa-Middle East is helping remittance flow to increase. Earlier, African people used to migrate to Europe – that was the traditional route. However, the Middle East has become a new destination for all these nationalities that is driving remittance flow,” he said.
However, Egypt showed a massive jump receiving $21 billion and taking the fifth slot jointly with Nigeria, followed by Pakistan and Bangladesh, jointly taking the sixth position recording $14 billion each, while Vietnam and Lebanon receiving $10 billion and $7 billion respectively.
Dilip Ratha, Manager of the World Bank’s Migration and Remittances Unit, told Gulf News, “Remittance works as an insurance policy against uncertainty and political turmoil. This was evident in the case of both Egypt and Pakistan – as both the country has been passing through difficult times.”
Remittance is a major source of external funding for the developing nations. Remittances help these countries in building up their foreign exchange reserves that helps them to meet the balance of payments and help stabilise the value of the local currency against the US dollar.
“Remittance flows from the GCC provide a lifeline to these countries including India, the Philippines and Bangladesh – the other major beneficiaries,” Ratha told Gulf News in a phone-in interview from Washington DC.
As a percentage of GDP, the top recipients of remittances, in 2011, were Tajikistan (47 per cent), Liberia (31 per cent), Kyrgyz Republic (29 per cent), Lesotho (27 per cent), Moldova (23 per cent), Nepal (22 per cent), and Samoa (21 per cent).
“The role of remittances in helping lift people out of poverty has always been known, but there is also abundant evidence that migration and remittances are helping countries achieve progress towards other Millennium Development Goals (MDGs), such as access to education, safe water, sanitation and healthcare,” said Hans Timmer, Director of the Bank’s Development Prospects Group.
Officially recorded remittance flows to South Asia are estimated to have increased by 12.8 per cent to $109 billion in 2012, World Bank data shows.
This follows growth averaging 13.8 per cent in each of the previous two years. India remains the largest recipient country in the world, receiving $69 billion in 2012.
“In addition to large numbers of unskilled migrants working mainly in the oil-rich Gulf Cooperation Council (GCC) countries, India also has a large skilled diaspora the US and other high-income countries,” the report says.
Sultan Bin Kharsham, Managing Director of Wall Street Exchange Centre, told Gulf News, with the economic condition improving, remittance flow also will grow this year.
“We see an increase in remittance flow from the UAE and across the GCC. Driven by economic growth, tourism and retail sectors, we expect remittances and fund flows to grow in the next few years,” he said.
Flows to Bangladesh, Pakistan and Nepal have also been robust, helped by strong economic growth in the GCC and India.
“Money remitted by foreign workers in the GCC to India, is estimated at $30 billion,” Shetty says. “This accounts for a bulk of this transaction in 2012. Our estimates suggest that inflows into Indian recorded a 15 per cent growth in 2012, mainly due to a steep depreciation of the rupee value.”
Remittances to the region are projected to remain buoyant in the coming years, reaching $140 billion in 2015.