World Bank warns remittance payments to plunge amid Covid-19
Remittances are expected to plunge by about 20 percent globally this year, the biggest decline in recent history, as closures cause a global recession and job losses that prevent workers from sending money to their families back home, the World Bank said in a report.
"Remittances are a vital source of income for developing countries," World Bank Group President David Malpass said in a statement. "The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies."
Total remittances are expected to fall to $445 billion from $554 billion in 2019, the report said.
Even with the decline, these payments are expected to become an even more important source of income in low- and middle-income countries "as the fall in foreign direct investment is expected to be larger (more than 35 percent)," the World Bank report said.
Dilip Ratha, lead economist for the report, said the payments act as a "lifeline" and a way of "sharing prosperity" with the families who receive them.
"That sort of decline is actually unprecedented in the recorded history," Ratha told reporters, adding that migration also might decline due to the crisis.
In some countries, payments from workers abroad amount to a quarter or even one-third of GDP, including South Sudan, Haiti, Nepal, Kyrgyz Republic, Tajikistan, Montenegro and Tonga.
Remittance flows are expected to fall most notably in Europe and Central Asia (27.5 percent), followed by sub-Saharan Africa (23.1 percent), South Asia (22.1 percent), the Middle East and North Africa (19.6 percent), Latin America and the Caribbean (19.3 percent), and East Asia and the Pacific (13 percent).
The efforts to contain the spread of COVID-19 are expected to cause a severe global downturn, and there is a substantial risk of continued economic recession well into 2021, the report said.
Immigrants are especially vulnerable to loss of wages since they tend to be concentrated in urban areas and work in service industries hardest hit by the economic shutdown, including food and hospitality, retail and wholesale, tourism and transport, and manufacturing.
And "as the farming season begins in many countries, there are emerging signs of labor shortages in the agriculture sector of industrial countries that rely on migrant workers," the World Bank said
The report also cautioned that migrants are being left out of programs governments have implemented to deal with the virus, including access to healthcare, and are also unable to return home due to transportation shutdowns.