Migration and Development Report

Migration and Development Report

Subject :Economy

Context: World Bank’s latest Migration and Development Brief titled, ‘Remittances Brave Global Headwinds’.

Concept:

Remittance denotes a sum of money sent by one party to another. These days, the term typically describes the money sent by someone working abroad to their family back home

Highlights:

• World remittances are expected to touch $794 billion in 2022, up from $781 billion in 2021. This represents a growth of 4.9%, compared to 10.2% in 2021, which was the highest since 2010.
• Of the $794 billion, $626 billion went to low­ and middle-income countries (LMICs)
• The top five recipient countries this year: India ($100 billion), followed by Mexico ($60 billion), China ($50 billion), the Philippines ($38 billion) and Egypt ($32 billion)
• India received $89.4 billion in 2021 this is the first time a country will reach the $100 billion mark.

Structural Change in key destinations 

• The largest sources of remittances: Gulf Cooperation Council (GCC) countries (UAE, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait), and the U.S./U.K.
  1. From: largely lows killed, informal employment in the Gulf Cooperation Council (GCC) countries from 54% to 28% as in GCC countries, Indian migrants benefited from governments’ direct support measures to keep inflation low in 2020-2021
  2. To: a dominant share of high skilled jobs in high income countries such as the U.S., the U.K., and East Asia (Singapore, Japan, Australia, New Zealand from 26% to 36% as the Indian migrants in high ­income countries worked from home and benefited from large fiscal stimulus packages.while in the post pandemic phase, wage hikes and record high employment conditions supported remittance growth in face of high inflation in 2020-2021.
• The U.S. with a share of 23%, surpassed Saudi Arabia as India’s top source country for remittances.

Reasons for sustained growth in remittances

• Reopening of various sectors in host country
• Migrants’ determination to help their families back home during the tough post pandemic recovery phase
• Lot to the stimulus measures enacted to underpin faltering high-income economies especially in the U.S. and Europe
• The depreciation of the Indian rupee vis à vis the U.S. dollar – it fell by 10% between January and September 2022 led to an increase in remittances.

Future prospects:

• It predicts that growth in remittances will fall to 2% in 2023 as the GDP growth in high income countries continues to slow, eroding migrants’ wage gains. For South Asia as a whole, the growth in remittances is expected to fall from 3.5% in 2022 to 0.7% in 2023.
• A higher inflation combined with a slowdown will limit remittance flows
• The demand for labour is expected to soften as construction activities for the FIFA World Cup in Qatar
• The remittances to India are forecast to grow by 4% next year