labels: World Bank
Overseas remittances to fall 5 per cent to $290 billion in 2009: World Bank news
25 March 2009

Remittances by expatriate workers to their home countries will fall by almost 5 per cent to $290 billion in 2009, from last year's high of $305 billion, as the global downturn raises the prospect of job losses, anti-migrant sentiment and even violence around the world, according to a World Bank study.

Even with the drop of between 5 and 8 per cent, remittances will still outstrip private capital flows, expected to fall by half in 2009, and official development aid, typically around $100 billion, the study noted.

''Remittance flows will stay ''resilient'' because many countries have a well-established ''stock'' of migrants who are unlikely to leave their adopted countries. They will continue to send money home, even if they have to reduce the amount they send,'' says Dilip Ratha, who leads the World Bank's migration and remittances team.

Top 5 Recipients of Remittances in 2008

India:             $45 billion
China:            $34 billion
Mexico:         $26 billion
Philippines:    $18 billion
Poland:          $11 billion

Although newspapers reports speak of large numbers of migrants returning home, migrant workers are still moving to destination countries, although at a slower pace. They, too, will add to the flow of remittances, says Ratha.

''A new study by Centre for Cities finds that migrant workers from Eastern Europe are mostly staying put in the United Kingdom even as unemployment rises,'' the World Bank study noted.

To bring home his point, Ratha says many Tajik migrants continue to stay in their adopted country Russia despite incidents of violence such as the beheading of a young Tajik migrant worker near Moscow in December.

"Anecdotes are coming out that despite the violence against migrants, despite the very serious heightening of anti-immigration sentiments in Russia, especially against the Tajik migrants, there are reports that the migrants don't want to come back. They want to stay on where they are. They find that back in Tajikistan the situation is even worse," says Ratha.

Ratha's team predicts remittances will amount to about 1.8 per cent of GDP for developing countries in 2009, a slight drop from 1.9 per cent of GDP in 2008.

However, considering that officially recorded remittances registered double-digit annual growth in the past few years, the expected fall will cause hardships in many poor countries, says the Bank's revised migration and development brief.

Remittances flowing to developing countries from Russia, South Africa, Malaysia and India are ''especially vulnerable to the rolling economic crisis,'' says the brief.

Remittances decelerated sharply in the second half of 2008, with the steepest drop expected for Europe and Central Asia.

Countries such as Tajikistan, Moldova and Kyrgyz Republic with large numbers of workers in Russia will see remittances declining as a share of GDP ''by much higher numbers,'' says Ratha.

Ratha says employment of foreign-born workers in the United States is holding steady in wholesale and retail and going up in the restaurant and hotel sector, though their employment in construction has fallen faster than that of native born workers, based on new US Bureau of Labor Statistics data.

But the official statistics perhaps don't tell the full story, he adds.

''Migrant workers are more flexible. They are cheaper. They work harder and they don't insist on all the right employment conditions. They don't ask for too much. And I think there is an additional reason ľa lot of workers that have dropped out of the payroll officially continue working off the books.''

Ratha has urged developing countries to tap the wealth of their overseas diasporas by issuing diaspora bonds. In Africa, for instance, such bonds could help countries dependent on limited official development assistance.

Countries should also make it easier and cheaper for migrants to send remittances home, he says.

Currently, the average cost of sending money through official channels is over 10 per cent of the value of the transaction. In some places, the cost rises to 25 to 30 per cent.

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Overseas remittances to fall 5 per cent to $290 billion in 2009: World Bank