How Remittances Have Been Impacted By The Covid-19 Pandemic
Whilst much of the world is still in the grips of the Covid-19 pandemic, it is fair to say that for most of the world’s biggest economies, things are close to getting back to normal. This pandemic has of course impacted the lives of billions, and it is only now that we are starting to see the economic fallout from the world response to the virus outbreak. This was an unprecedented occurrence that left even the wisest experts in finance unable to make accurate predictions. Now that we have the data, however, we can get a better idea of the economic impact which the pandemic has had.
With this in mind, we are today going to focus on remittances, money sent through apps like Ria Money transfer, and through more traditional routes like banks. The large majority of this money is sent from migrant workers back to their home nation, and here is how it has changed during the pandemic.
Confusing Figures Around Remittances
There are two big impacts that Covid-19 has had on the volume of remittance sent, which have contributed towards some interesting figures. The first is that when so many countries were in lockdown, those remittances slowed as migrant workers struggled to earn a living. Conversely, however, we have then seen the volume increase as migrant workers predominantly in first world countries got back to earning, whilst their relatives in the homeland still struggled.
Countries Most Dependent on Remittances
We can look at the volume of remittances with two measures: one as a percentage of GDP and also in terms of actual cash amount. Here are the top 3 countries based on each of those metrics:
Breakdown by GDP Percentage
Naturally, it is the smaller nations making up this list, who receive a steady flow of remittances but have very low GDP which propels them up the list.
Tonga – 39% of GDP
Somalia – 34.8% of GDP
Kyrgyz Republic – 31.3% of GDP
In all of these examples, the cash value of remittances has reduced, but so too has GDP which gives a very similar reading to the figures from 2020.
Breakdown by Cash Value
Looking at the actual cash value of remittances gives us a much clearer idea as to which countries are most reliant on cash transfers from abroad.
India – USD $89.6 billion, this is an increase of 3% on 2020
China – USD $59.5 billion, an increase of 6% on 2020
Mexico – USD $51.6 billion, the country with the largest yearly increase, 27.1% up from 2020
As you can see, there have been increases in all of the top nations with regards to the cash value of remittances, owing to the Covid-19 pandemic. The World Bank Global Director for Social Protection and Jobs Michal Rutkowski said the following regarding this data and the conditions in which we are living.
“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the COVID-19 crisis. Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic,”
This year will continue in a similar trend but 2023 is expected to see a leveling out of remittances according to a recent report by the World Bank.