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Remittances to reach $20b by Dec, says WB

FE REPORT | November 01, 2020 00:00:00

Bangladesh's remittance inflow is projected to grow by 8.0 per cent this year, bucking the falling trend in the world and the region, the World Bank (WB) says.

The country's external income from the migrant workers could reach US$20 billion by December this year from the current level of $16 billion, the WB report on "Migration and Development Brief," released on Friday, said.

In contrast, the Washington-based lender has said the global remittance flow to low and middle-income countries is projected to fall by 7.0 per cent  to $508 billion in 2020, followed by a further decline of 7.5 per cent, to $470 billion in 2021.

Although the remittances inflow to South Asia is projected to suffer a protracted decline of around 4.0 per cent in 2020 and 11 per cent in 2021, Bangladesh's foreign exchange income will be in a better position, the bank said.

"In Bangladesh, the negative impact of the COVID?19-induced global economic slowdown has been somewhat countered by the diversion of remittances from informal to formal channels due the difficulty of carrying money by hand under travel restrictions as well as the incentives to transfer remittances," the report said.

Describing reasons for the higher remittance forecast for Bangladesh, the WB said, the "Hajj effect" in Saudi Arabia seems to have affected the flows in July 2020 before it recovered further.

A more important reason for a stunning 53.5 per cent year-on-year increase in remittance flows in Q3 (Jul-Sep) could be the damage from the floods, affecting nearly 1.0 million homes and 4.7 million people, the WB said.

Other plausible explanations include pent?up remittances after the shutdown in Q2 (Apr-Jun) and a shift in flows from informal to the formal channels, the bank stated.

On the South Asia perspective, the WB report said, the deceleration in remittances to the South Asian region is driven by the prolonged global economic slowdown due to the coronavirus outbreak.

"Given that the pandemic is likely to persist through 2021, the earlier anticipated V-shaped recovery now seems implausible. This is likely to directly affect remittance outflows from the United States, the United Kingdom, and the GCC and EU countries to South Asia."

It said the remittances are projected to fall by about 9.0 percent in India, to $76 billion in 2020, 12 per cent in Nepal and 9.0 per cent in Sri Lanka.

However, the external income for Pakistan would grow at about 9.0 per cent rate, totalling to about $24 billion in the current calendar year.

The Washington-based lender said the coronavirus?related global slowdown and travel restrictions will also affect migratory movements, and this is likely to keep remittances subdued even in 2021.

"The coronavirus crisis has affected both international and internal migration in the South Asia region. Many international migrants, especially from the GCC countries, returned to countries such as India, Pakistan, and Bangladesh."

According to the Bureau of Manpower, Employment, and Training in Bangladesh, the number of migrants was 181,218 for January to May 2020 compared to 700,159 in the same period last year.

The WB, in its Migration and Development Brief report, said since the COVID-19 pandemic and economic crisis continue to spread, the amount of money migrant workers send home is projected to decline 14 per cent by 2021 compared to the pre COVID-19 levels in 2019.

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