The latest edition of the World Bank’s Migration and Development Brief reports that, in spite of the ongoing Covid-19 pandemic, global remittance flows proved resilient in 2020. The dip in these flows was smaller than initially projected. India, which received over USD 83 billion in remittances, led the pack. Even amid a pandemic that severely impacted the world economy, the reduction faced by India was a mere 0.2% compared to the figures from the previous year.
Remittance Inflow of India
India topped the list by receiving over USD 83 billion in remittances for the year 2020. This marked only a slight 0.2% decrease when compared to the previous year. A significant factor contributing to this decline was a 17% drop in remittances from the United Arab Emirates, which counterbalanced the enduring flows from the United States and other host countries. To put things in perspective, the remittance inflow for India in 2019 amounted to USD 83.3 billion.
Global Remittances
China came second in terms of global remittances in 2020, with an inflow of USD 59.5 billion. Following India and China were Mexico, the Philippines, Egypt, Pakistan, France, and Bangladesh. Regarding remittance outflows, the United States took the lead with a staggering USD 68 billion. The United Arab Emirates, Saudi Arabia, Switzerland, Germany, and China closely followed them.
Reason for the Steady Flow of Remittances
Key factors leading to steady remittance flows include better-than-expected economic conditions, resulting from fiscal stimulus in host countries, a transition from cash to digital and informal to formal channels, and fluctuating oil prices and currency exchange rates.
What is Remittance?
A remittance refers to the act of sending money to another party, usually in a different country. The sender is often an immigrant who sends this money to a relative back home. Remittances are crucial sources of income for individuals in low-income and developing countries. They often surpass the amount acquired through direct investment and official development aid. Remittances not only help families manage basic necessities like food and healthcare, but they also bolster India’s foreign exchange reserves and fund its current account deficit.
About the World Bank
The Bretton Woods Conference in 1944 led to the creation of the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF). The IBRD was later renamed the World Bank. This global partnership comprises five institutions working together to build sustainable solutions that reduce poverty and ensure shared prosperity for developing countries. There are 189 member countries, including India. The World Bank also releases major reports such as the Ease of Doing Business, Human Capital Index, and the World Development Report.
World Bank’s Migration and Development Brief
This brief is prepared by the Migration and Remittances Unit of the Development Economics (DEC), the World Bank’s primary research and data division. The purpose of the brief is to provide updates on key developments in migration and remittance flows and related policies every six months. It also offers medium-term predictions for remittance flows to developing countries.