The Migration and Development Brief 20 issued on April 19, 2013 contained a tabulation error in Table 1 of page 11. This affects the estimates highlighted below, which were shifted by one year. For example, the remittance inflows for the World in 2012 were reported as $514 billion, instead of $529 billion.
Migration and Development Briefs
We have issued the latest Migration and Development Brief, which includes the latest estimates for remittances in 2012 and projections up to 2015.
As our estimates for 2012 show, international migrants are weathering the effects of the ongoing global economic crisis and are on track to remit $406 billion in savings to their families in developing countries this year.
We expect remittances to developing countries to continue growing over the near term by an estimated 7.9 percent in 2013, 10.1 percent in 2014 and 10.7 percent in 2015 to reach $534 billion in 2015.
We have updated the data on worldwide remittance flows - including flows to developing countries and high income countries - to $483 billion in 2011. Of this, developing countries received $351 billion in 2011. Worldwide remittance flows are expected to reach $593 billion in 2014.
Officially recorded remittance flows to developing countries are estimated to have reached $351 billion in 2011, up 8 percent over 2010 (See brief).
For the first time since the global financial crisis, remittance flows to all six developing regions rose in 2011. Growth of remittances in 2011 exceeded our earlier expectations in four regions, especially in Europe and Central Asia (due to higher outward flows from Russia that benefited from high oil prices) and Sub-Saharan Africa (due to strong south-south flows and weaker currencies in some countries that attracted larger remittances). By contrast, growth in remittance flows to Latin America and Caribbean was lower than previously expected, due to continuing weakness in the U.S. economy and Spain. Flows to Middle East and Africa were also impacted by the “Arab Spring”.
We have just released a Migration and Development brief prepared by our colleagues Jose Anson and Nils Clotteau of the Universal Postal Union (UPU) based in Berne, Switzerland. There are an estimated 660,000 post offices in the world, larger than all bank branches combined. In this brief, Jose and Nils explore the role that postal networks can play in providing money transfers (remittances) and basic financial services to low-income people living in developing countries, in particular those in countries in Sub-Saharan Africa.
It has often been said that the diaspora of developing countries possess considerable wealth that can be tapped – via issuance of diaspora bonds – for the origin countries’ development. We have just released a Migration and Development Brief where we present some preliminary estimates of the annual savings of the global diaspora from developing countries.
As outlined in chart 1, there are three broad elements to estimating savings of the diaspora from developing countries: (a) the size of the diaspora stocks in the different host countries, (b) the average income of the diaspora members, and (c) their propensity to save. However, lack of comparable data on migration and migrants’ income across host countries, the undocumented status of many migrants, and differences in the concepts used for income and savings across countries make this exercise especially challenging.
|Chart 1: Diaspora savings and potential market for Diaspora bonds.|
|Click here to see a larger version of this chart.|
This outlook for remittance flows, however, is subject to three key risks:
First, the economic recovery in the major destination countries in North America and Europe is not very firm yet. There is a risk that the fiscal retrenchment being planned or implemented in some of the major destination countries might restrain aggregate demand and economic growth, and contribute to high unemployment rates, which in turn could reduce the migrants’ incomes and remittances.
Second, movements in currency exchange rates and commodity prices can pose unpredictable risks for remittance flows. While a weaker US dollar can imply larger dollar-denominated remittances from Europe, it can also increase dollar prices of assets and goods in remittance-receiving countries (such as India, Mexico and the Philippines).
- Finally, there is a risk that immigration controls imposed in response to high domestic unemployment rates will deepen and adversely affect migration and remittance flows. In general, protectionist policies that slow the movement of goods and people across borders are likely to delay an adjustment to the crisis and prolong the process of recovery. Such policies are also inconsistent with the sharp increase in demand for migrants projected in the rapidly aging societies of the North.
The Uganda Daily Monitor reported recently that according to the World Bank’s latest Global Economic Prospects report, “remittances to developing countries is forecasted [sic] to recover modestly from $454 billion in 2009 to $771 billion by 2012, which still stands below the 2007 $1.2 trillion.” Since we produce the global remittances data and estimates (which incidentally show that remittance flows to developing countries
|Photo © Curt Carnemark / World Bank|
The issue of migrant remittances being confused with private capital flows (and even aid flows) is not new. Central banks all around the world have been struggling with this issue for several years now. A global survey of central banks that we conducted during 2008-09 suggests that central banks find it challenging to separate migrant remittances from other small-value transfers such as trade payments, small investments, and even transfers by/to non-governmental organizations and embassies.
Saudi Arabia was the second largest sender of remittances (after the United States) from 1988 to 2006. In 2007 and 2008, it was displaced by Russia as the second largest sender of remittances (figure 1). Flows from Russia have increased rapidly in recent years, reaching $26.1 billions in 2008. However, this rapid growth was interrupted in 2009, when remittance outflows fell by 29% to $18.6 billions in 2009. We don't have 2009 outflows data for Saudi Arabia yet but based on inflows data from Bangladesh, Pakistan, and the Philippines, Saudi Arabia's remittances outflows have not fallen much. Saudi Arabia was likely the second largest sender of remittances in 2009.
There are two possible explanations for why remittances from Saudi Arabia have been more stable than those from Russia (see Migration and Development Brief 12 for details). First, oil prices are more closely related to economic activity (thus, better employment prospects for migrants) in Russia than in Saudi Arabia. As major oil-exporters, both countries benefited from the surge in oil prices in the last few years. But only in Russia did remittance outflows move closely with oil prices (figure 2). This was not the case in Saudi Arabia, which has had ambitious development plans for a while and an aggressive counter-cyclical fiscal policy. Second, Russia’s borders with its neighbors are much more porous than those of Saudi Arabia, which enforces immigration quotas strictly. Russia’s porous borders have allowed migrants from neighboring countries to move in an out in response to changes in labor demand.