Syndicate content

Remittance flows to developing countries exceed $350 billion in 2011

Dilip Ratha's picture

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”.
 

Following this rebound in 2011, the growth of remittance flows to developing countries is expected to continue at a rate of 7-8 percent annually to reach $441 billion by 2014. Worldwide remittance flows, including those to high-income countries, are expected to exceed $590 billion by 2014.

However, there are serious downside risks to this outlook. Persistent unemployment in Europe and the U.S. is affecting employment prospects of existing migrants and hardening political attitudes toward new immigration. Volatile exchange rates and uncertainty about the direction of oil prices also present further risks to the outlook for remittances.

Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a life line to the poor.

There is a pressing need to improve data on remittances at the national and bilateral corridor level. This would make it possible to more accurately monitor progress towards the ‘5 by 5’ remittance cost reduction objective.

Comments

Submitted by Moazzam on
And what was the net flow of monies from developing to developed world? The real impacting factor.

Submitted by Isabel Louis on
Dr. Ratha, It is refreshing to read such a positive view on remittances. While I was working in a nationalized bank n India (Kerala, in 70's), I used to be amazed and overwhelmed at the amount of funds flow into that small state from the Gulf countries. As an officer in charge of remittances in that small branch, I used to get almost annoyed at the number of transactions that I had to push through before the end of every day. By next day, most of the incoming fund would be promptly withdrawn! That brings to my questions re. remittances: 1. Conspicuous consumption in the recipient country- You have discussed this point, and I agree with you- that though for the individuals concerned it may be conspicuous, and somewhat disturbing the economic and social balances at micro levels, for the society as a whole, this leads to many economic goods on various fronts. However, I still remember reading about some tragic social consequences (like broken marriages, families and crimes etc) in many Kerala communities, which were somewhat connected to sudden wealth with not much of conduits to spend other than building palacial, gaudy houses. 2. This second issue emerges from my life in Canada and the U.S. as an migrant myself. When a migrant sends off part of his earnings out of the origin country, his consumption power is reduced to that extent, and hence could it not be construed as loss for the origin country? This is especially hurting during times of recessions like the current one, when the already depressed consumption spending (forming more than 70% of economy), is affected further adversely, and thus at some levels, it falls out of line with the incomes generated. 3. Perhaps when the benefits of remittances is calibrated, some measure of losses may have to built into it to get a global impact? I agree that to measure the latter, one has to use lot of judgemental tools that may not be very amenable to closer scrutiny. That said, I am really fascinated at the idea of Diaspora bonds, and similar leveraging mechanisms to channel these funds into creation of real economic goods.

Add new comment