Submitted by Ceren Ozer on Tue, 03/29/2011 - 10:37
For countries with substantial numbers of workers in the Middle East, recent events have not only raised concerns for the repatriation and welfare of their citizens, but have also raised fears of a possible slowdown in remittances. Will remittance flows noticeably decrease due to recent events in Egypt, Libya, and Tunisia?
For South Asian countries, remittances are among the largest and most stable sources of foreign exchange and their developmental impact have been remarkable. For example, in Nepal national poverty level has come down from 42% to 31% during 1996 to 2004, and to 21% today, largely on the account of remittances which finance household consumption as well as education and health expenditures. Nepal, Bangladesh, and Sri Lanka, were among the top 15 remittance recipients in 2009—with inflows being equivalent to 24% of the GDP in Nepal, 12% in Bangladesh, 8% in Sri Lanka, 5% in Pakistan and 4% in India.
Gulf States employ more than 11 million expatriate workers, an estimated 8 million or more from South and East Asian countries. Saudi Arabia, the U.A.E, and Qatar are top destination for South Asian migrants and are main sources of remittance inflows. The table as well as the country profiles below demonstrates the sheer magnitude of migrant workers in the Arab Gulf countries and their contributions to the labor force; sometimes greater in overall numbers and proportion than the respective labor force in the countries.
Submitted by Naomi Ahmad on Thu, 09/09/2010 - 09:45
This is a true story…
It is the year 2005. 26 young Bangladeshi men are crammed on a small rubber boat. Floating on the vast Mediterranean Sea. The boat's engine had stalled days ago.
10 days without food or water. The men are faced with a choice – death from drinking sea water or the inhuman alternative of having to drink one’s own urine. The pain of watching a brother or a dear friend slowly and painfully starve to death is too much. One by one the men start looking at each other - wondering which part of a dead body would be edible. Another weakly searches for something sharp enough to cut out a chunk of his own flesh, before collapsing dead from hunger and fatigue…
This is what a group of young Bangladeshis faced in 2005, when they embarked on an illegal journey to Spain. Only three survived the ordeal and lived to speak of the horrors of those 10 days.
A World Bank report released on July 30 finds that poverty in Pakistan fell by an impressive 17.3 percentage points between 2001 and 2008 (from 34.5 percent in 2001-02 to 17.2 percent in 2007-08). Three out of Pakistan’s four major provinces – Khyber Pakhtunkhwa (formerly NWFP), Punjab, and Sindh – saw significant declines in poverty during this period. The largest fall in poverty was in Khyber Pakhtunkhwa (KP). According to the Bank report “high level of remittances, both foreign and domestic, seem to have facilitated” the decline in poverty in KP.
Pakistan saw migrant remittances reach a record $ 8.9 billion in fiscal year 2010, an increase of 14 percent compared to the 2009 fiscal year despite the global economic crisis (Pakistan’s fiscal year runs from July to June). The World Bank report says “Continued strong growth in worker’s remittances in the past few years has also contributed to improvements in the external current account balance” and “have facilitated improvement in the country’s external position”.
The food, fuel, and financial crises during the last three years sent shockwaves throughout the world and its effects rippled across South Asia. It impacted growth, causing a reduction of growth by nearly 3% from the peak of 8.9% in 2007 to 6.3% in 2009, led to job losses, declines in stock market value, decreases in tourism, and increasing pressures on already weak fiscal, balance of payments, reserves and exchange rates.
I was based in New Delhi during the crisis, and the effects were palpable. For a moment, it looked as if confidence was ebbing---the construction cranes in Gurgaon (the fastest-growing township around Delhi) became silent, a young scholar at Delhi University ran a survey of what graduates might do as job markets became difficult, airlines ran half-empty and racked-up massive losses, jobs were lost heavily in diamond-cutting in Gujarat and IT firms stopped hiring in Bangalore, and people paused to consider the implications of such a dramatic change from the accelerating and heady growth of the previous years. But despite the circumstances, and thanks to strong and prompt government actions, confidence has swiftly returned, the region has proven to be quite resilient and a noticeable resurgence has taken hold.
The proportion of people living below the poverty line in Bangladesh has fallen sharply from close to 60% in 1990 to 40% in 2005. Using the Household Income and Expenditure Survey conducted by the Bangladesh Bureau of Statistics; economists Aphichoke Kotikula, Ambar Narayan and Hassan Zaman find that the number of poor people in Bangladesh fell by nearly 6 million between 1990 and 2005. The study, “To what Extent are Bangladesh’s Recent Gains in Poverty Reduction Different from the Past?” also shows substantial improvements in living conditions. For instance, the percentage of households with connections to electricity increased from 31% to 44% between 2000 and 2005.
Key factors contributing to poverty reduction include changes in certain household characteristics – most prominently, a smaller number of dependents and improvements in their education.
Submitted by Zahid Hussain on Wed, 01/06/2010 - 14:05
The Netherlands’ discovery of large natural gas deposits in the North Sea in the 1960s had serious repercussions on important segments of its economy, as the Dutch guilder became stronger, making Dutch non-oil exports less competitive. This has come to be known as "Dutch disease" or “resource curse.” Although generally associated with a natural resource discovery, it can arise from any large inflow of foreign currency--foreign assistance, foreign direct investment and remittances, among others. A surge in remittances can be expected to result in appreciation of the currency in the receiving country with all its attendant consequences of crowding out exports, crowding in imports, and induce movement of resources into the production of non-traded goods.
Bangladesh has experienced a remittance boom since FY01—with annual flows rising from $1.9 billion to $9.7 billion in FY09—growing at a compounded annual rate of 22.6 percent for eight years and still counting! As a result, remittance has now reached nearly 11 percent of GDP and is now the single largest source of foreign exchange earnings.
The future is unpredictable and yet, from time to time, we must take stock of what we accomplished and where we are heading. Over the past decade, better policies and rising integration with the global economy have pushed growth in South Asia upwards. By 2007, the peak year just before the global financial crisis, the region’s GDP growth had reached nearly 9 percent a year (just slightly behind East Asia’s). This growth acceleration extended to all the countries of the region.
The global financial crisis took South Asia’s growth down by about 3 percentage points (from 8.6% in 2007 to 5.6% in 2009). This was the smallest growth decline among all regions of the world and the prospective recovery is already underway. The World Bank expects GDP growth to recover to nearly 7 percent per annum on average in 2010-2011.
Dipak Dasgupta, a Lead Economist at the World Bank, points to four key factors that have cushioned South Asia’s growth decline during the crisis and are helping in the strong recovery.
(1) Remittances held up much stronger in South Asia than in other regions. In Nepal, the reliance on remittances is the highest, and without these flows, growth in consumption would have collapsed.
(2) The resilience of some key export-oriented sectors also helped. Garments in Bangladesh and IT software exports from India, for instance, have held up relatively well.
Submitted by Zahid Hussain on Wed, 07/22/2009 - 10:25
The Bangladesh economy entered FY10 in a position of strength, notwithstanding some pretty tough global circumstances. Good recovery in agriculture, a sustained growth in exports and remittances, and a steady growth in services helped achieve an estimated overall growth of 5.9 percent in FY09, compared with 6.2 percent in FY08. A decline in international commodity prices driven by the global recession and an improvement in domestic food supplies brought inflation down from 10 percent in FY08 to an estimated 7 percent in FY09. Rice prices have remained stable too at nearly 40 percent below the peak reached in April, 2008. The economy has shown reasonable stability in terms of most other macroeconomic indicators. The external current account has been in a large surplus; the exchange rate has been stable; foreign exchange reserves have reached record high levels of nearly $7.5 billion; fiscal balances have been contained; and private credit growth has remained decent.
This is all good news but it doesn’t mean Bangladesh goes totally unscathed by those tough global circumstances.
Remittances have emerged as a key driver of economic growth and poverty reduction in Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years (1979-2008).
Revenues from remittances now exceed various types of foreign exchange inflows, particularly official development assistance and net earnings from exports. The bulk of the remittances are sent by Bangladeshi migrant workers rather than members of the Bangladeshi Diaspora. Currently, 64 percent of annual remittance inflows originate from Middle Eastern nations.
Robust remittance inflows in recent years (annual average growth of 27 percent in FY06-FY08) have been instrumental in maintaining the current account surplus despite widening a trade deficit. This in turn has enabled Bangladesh to maintain a growing level of foreign exchange reserves.
For countries with substantial numbers of workers in the Middle East, recent events have not only raised concerns for the repatriation and welfare of their citizens, but have also raised fears of a possible slowdown in remittances. Will remittance flows noticeably decrease due to recent events in Egypt, Libya, and Tunisia?
This is a true story… 
The food, fuel, and financial crises during the last three years sent shockwaves throughout the world and its effects rippled across South Asia. It impacted growth, causing a reduction of growth by nearly 3% from the peak of 8.9% in 2007 to 6.3% in 2009, led to job losses, declines in stock market value, decreases in tourism, and increasing pressures on already weak fiscal, balance of payments, reserves and exchange rates.
The proportion of people living below the poverty line in 
The Netherlands’ discovery of large natural gas deposits in the North Sea in the 1960s had serious repercussions on important segments of its economy, as the 
The future is unpredictable and yet, from time to time, we must take stock of what we accomplished and where we are heading. Over the past decade, better policies and rising integration with the global economy have pushed growth in South Asia upwards. By 2007, the peak year just before the global financial crisis, the region’s GDP growth had reached nearly 9 percent a year (just slightly behind East Asia’s). This growth acceleration extended to all the countries of the region.
The Bangladesh economy entered FY10 in a position of strength, notwithstanding some pretty tough global circumstances. Good recovery in agriculture, a sustained growth in exports and remittances, and a steady growth in services helped achieve an estimated overall growth of 5.9 percent in FY09, compared with 6.2 percent in FY08. A decline in international commodity prices driven by the global recession and an improvement in domestic food supplies brought inflation down from 10 percent in FY08 to an estimated 7 percent in FY09. Rice prices have remained stable too at nearly 40 percent below the peak reached in April, 2008. The economy has shown reasonable stability in terms of most other macroeconomic indicators. The external current account has been in a large surplus; the exchange rate has been stable; foreign exchange reserves have reached record high levels of nearly $7.5 billion; fiscal balances have been contained; and private credit growth has remained decent.
