The global crisis is also expected to lead to a sharp fall in remittances from migrants working in foreign countries, a World Bank report said.
In 2009 during the global financial crisis, the remittance flows to low- and middle-income countries declined by 5 percent. Noting that in this crisis ,the situation is much worse and the fall in the price of crude oil will affect remittances from workers in the Gulf countries and Saudi Arabia.
The global flow of remittances to low- and middle-income countries is expected to fall by 20 percent this year and rebound by 5.2 percent from a low base in 2021.
The remittances to South Asia are projected by the World Bank to decline by 22 percent this year, from $140 billion in 2019 to $109 billion in 2020.
‘In India, remittances are projected to fall by about 23 percent in 2020, to $64 billion – a striking contrast with the growth of 5.5 percent and receipts of $83 billion seen in 2019’, said the report.
For India, remittances were 2.8 percent of GDP in 2019 and a 23 percent drop will be a sizable hit. A Nomura report says, ‘According to the World Bank, remittances are spent by families back home for basic needs. This makes the trade-off even more stark for governments in developing countries that are already faced with the lives versus livelihood dilemma in implementing measures to contain local outbreaks. For the Philippines and India, lower remittance inflows will also partly offset the benefit of falling oil prices.’
For other neighbouring countries of India, Pakistan, is projected to decline to about 23 percent, totalling about $17 billion, compared with a total of $22.5 billion in 2019, when remittances grew by 6.2 percent.
For Bangladesh, remittances are projected at $14 billion for 2020, a likely fall of about 22 percent. Remittances to Nepal and Sri Lanka are expected to decline by 14 percent and 19 percent, respectively, in 2020.
The coronavirus‐related global slowdown and travel restrictions will also affect migratory movements, and this is likely to keep remittances subdued even in 2021.