With Sanket and Ani
We have just released Migration and Development Brief 11 (see accompanying presentation) reporting latest data on remittance flows. Newly available data show that officially recorded remittance flows to developing countries reached $338 billion in 2008, higher than our previous estimate of $328 billion. Based on monthly and quarterly data released by some central banks and in line with the World Bank’s global economic outlook we estimate that remittance flows to developing countries will fall to $317 billion in 2009. This 6.1 percent decline is smaller than our earlier expectation of a 7.3 percent fall.
By now it is clear that existing migrants are not returning even though the job market has been weak in many destination countries; instead they are staying on longer and trying to send money home by cutting living costs. New migration flows are lower due to the economic crisis, but they are still positive. We maintain our expectation of a recovery in migration and remittance flows in 2010 and 2011, but the recovery is likely to be shallow.
Remittance flows to South Asia grew strongly in 2008 despite the global economic crisis, but now there are risks that they may slow down in a lagged response to a weak global economy. East Asia and Sub-Saharan Africa also face similar risks. By contrast, remittance flows to Latin America and the Caribbean, and Middle East and North Africa have been weaker than expected in 2009; yet, they appear to have reached a bottom already, with the expectation of a recovery in 2010 and 2011.
In all the regions, remittance flows are likely to face three downside risks: the economic recovery may prove to be even shallower and jobless; that could encourage tighter immigration controls; and unpredictable exchange rate movements can affect the US dollar value of remittances as well the motivation for remittances.
Despite these risks, remittances are expected to remain more resilient than private capital flows. Thus, remittances will become even more important as a source of development financing in many developing countries. While near-term policy response may tend toward erection of barriers to migration, a more appropriate policy response should involve efforts to facilitate migration and remittances, to make these flows cheaper, safer and more productive for both the sending and the receiving countries.
For more information, read the Migration and Development Brief 11 or visit www.worldbank.org/prospects/migrationandremittances
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