Global economy could lose $108 billion in remittances: ADB


Manila: Global remittances will fall by 108.6 billion dollars if the Covid-19 economic impact persists throughout the year, the Asian Development Bank (ADB) said on Monday.

This is equivalent to 18.3 per cent decline from what would have been expected without the impact of Covid-19, wrote economists James Villafuerte and Aiko Kikkawa Takenaka in a blogpost.

Remittance receipts in Asia and the Pacific will fall by 54.3 billion dollars, equivalent to 19.8 per cent of remittances in 2018.

By sub-region, remittances in South Asia are expected to fall furthest by 28.6 billion dollars (24.7 per cent of 2018 receipts) followed by remittances to Central Asia (3.4 billion dollars, 23.8 per cent), southeast Asia (11.7 billion dollars, 18.6 per cent) and east Asia ex-China and Japan (1.7 billion dollars, 16.2 per cent).

Remittances to the Pacific will also fall (267 million dollars, 13.2 per cent), said the ADB economists.

The majority of the decline in remittance flows to the region is explained by a 22.5 billion dollars fall in remittances from the Middle East which accounts for 41.4 per cent of total remittance loss in Asia. This is followed by a 20.5 billion dollars slump in remittances from the United States (37.9 per cent of total).

The fall in remittances from the European Union and the United Kingdom accounts for 6.3 per cent of the total or 3.4 billion dollars. The decline from Russian Federation amounts to 2.1 billion dollars of which 2 billion dollars reflects the decline in remittances going to Central Asia.
By percentage, the Middle East and the Russian Federation experienced the sharpest decline — over a third — primarily reflecting the effects of low demand and oil prices on remittances.

Governments in the region could help manage the impact of Covid-19 on remittances by extending temporary social services to assist stranded and returning migrants, providing income support to poor remittance-recipient families, and designing health, labour and skills policies to help migrants return to their jobs or be employed in their home countries.