Though there is a dip in remittances by 7.3 per cent this year, the figure is far smaller than that for private flows to developing countries. According to the World Bank, remittances are relatively resilient as while new migration flows have dipped, the number of overseas migrants has not been severely affected by the crisis.
Risk factors
However, the risk factors include uncertainty about the intensity and duration of the economic crisis, volatility in exchange rates, and the possible tightening of immigration controls in major destination countries. “There is a risk that rising unemployment will trigger further immigration restrictions in major destination countries. Such restrictions would curb remittances more than forecast and would slow the global recovery in the same way as protectionism against trade would endanger a global upturn,” explained World Bank’s Development Prospects Group Director Hans Timmer. Remittances have slowed since the last quarter of 2008. In line with a recent revision in the World Bank’s forecast of economic growth, the new update (2009-2011) stresses the impact of the present financial crisis on the remittance flows and describes area and country specific trends.
The slowdown in the US construction sector has affected remittance flows to Latin America. There is 6.9 pc decline in remittances for the Latin America and Caribbean region. Sub-Saharan Africa is also likely to experience a 8.3 pct slowdown in its remittance flows. However,flows to South Asia and East Asia have been strong; but it is expected to decline somewhat in 2009. India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries. Tajikistan, Moldova, Tonga, Lesotho, and Guyana are the top recipients in terms of the share of remittances in GDP; which exceeded a quarter of their GDP.
