Dubai: Global remittances to low- and middle-income countries are expected to recover this year after two consecutive years of decline, says the latest edition of the World Bank’s migration and development brief.
The bank estimates that remittances to developing countries are expected to grow by 4.8 per cent to $450 billion (Dh1,652.3 billion) for 2017. Global remittances, which include flows to high-income countries, are projected to grow by 3.9 per cent to $596 billion.
The recovery in remittance flows is driven by relatively stronger growth in the European Union, the Russian Federation, and the United States. As a result, those regions likely to see the strongest growth in remittance inflows this year are sub-Saharan Africa, Europe and Central Asia, and Latin America and the Caribbean.
After two years of decline, remittances to the Middle East and North Africa region are expected to grow by 4.6 per cent to $51 billion this year, largely driven by strong flows to Egypt, the region’s largest recipient, in response to the devaluation of the Egyptian pound. The growth outlook is, however, dampened by lower growth in the GCC due to oil production cuts and fiscal consolidation.
This year’s projected recovery follows a 1.2 per cent decline in Global remittances last year. The World Bank report estimated remittances (officially recorded) to developing countries were $429 billion in 2016, a 2.4 per cent decline from over $440 billion in 2015. Global remittances, including inflows to high-income countries, decreased by 1.2 per cent to $575 billion in 2016 from $582 billion in 2015. Last year India, topped remittance-receivers with $62.7 billion down from $68.9 billion in 2015. China, at second place with $61 billion was followed by the Philippines ($29.9 billion), Mexico ($28.5 billion) and Pakistan ($19.8 billion).
According to World Bank estimates, remittances growth to the South Asia region will be moderate at 1.1 per cent to $112 billion this year, due to continuing impact of lower oil prices and ‘nationalisation’ polices leading to constrained labour market conditions in the GCC.
Remittances to India, the world’s largest remittance recipient, is expected to grow by 4.2 per cent in 2017 to $65 billion, following a decline of nine per cent in 2016.
In the Gulf Cooperation Council (GCC) countries, fiscal tightening, due to low oil prices, and policies discouraging recruitment of foreign workers, will dampen remittance to East and South Asia. However, in 2018, overall remittances to low- and middle-income countries are expected to rise modestly by 3.5 per cent to $466 billion. Overall global remittances is expected to rise by 3.4 per cent to $616 billion in 2018.
Despite some variations in the volume of global remittances the average cost of sending $200 remained stagnant at 7.2 per cent in the third quarter of 2017, said the world bank study. This was significantly higher than the sustainable development goal (SDG) target of 3 per cent. sub-Saharan Africa, with an average cost of 9.1 per cent, remains the highest in the world.
Remittance industry expects costs to moderate as digitisation and competition intensifies.
“As a principle, our pricing strategy is to consistently review and position ourselves competitively as a truly global player in all our markets. The opportunity to lower the cost of sending money even more comes with the growth of mobile money-based services. With the proliferation of new technologies and smartphones, it makes online transfers even more convenient and cheaper. MoneyGram is a part of this evolution — as it enables customers to send and receive money via self-service channels,” Grant Lines, Chief Revenue Officer of MoneyGram told Gulf News in an interview.