Due to the Impact of COVID-19, Remittances from Migrant Workers Expected to Plunge 20% This Year... Low-Income Countries 'Hit Hard'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Due to the economic impact of the novel coronavirus infection (COVID-19), the total amount of remittances sent by migrant workers to their hometowns worldwide is expected to decrease by about 20% compared to last year.

On the 22nd (local time), the World Bank (WB) projected in a report addressing migration issues caused by COVID-19 that the total global remittances sent by migrant workers this year will amount to $572 billion, down from $714 billion last year. In particular, remittances to low- and middle-income countries are expected to decrease by 19.7% to $445 billion compared to the previous year. This decline is four times greater than the 5% drop seen immediately after the global financial crisis in 2009 and represents the largest drop since the WB began recording related statistics in 1980.

By region, Europe and Central Asia are expected to experience the largest decline, with remittances falling by 27.5%. Sub-Saharan Africa and South Asia are also expected to see decreases of 23.1% and 22.1%, respectively, while the Middle East and North Africa, as well as Latin America, are projected to see remittances from migrant workers drop by nearly 20%. The East Asia and Pacific region is expected to see a smaller decline of 13%, less than the overall decrease.

The WB analyzed that the reason for the decrease in remittances is due to reduced wages and employment for migrant workers. With most developed countries such as the United States and Europe still under lockdown measures due to the COVID-19 situation, the already vulnerable employment conditions of migrant workers are inevitably becoming more difficult.

Dilip Ratha, WB Chief Economist and author of the report, stated, "There are one billion migrant workers worldwide, and each supports three family members back home," adding, "The economic crisis caused by the pandemic will sharply reduce migrant workers' incomes and their ability to send money back home."

Although the scale of remittances from migrant workers is expected to shrink, they are anticipated to become even more important among various sources of foreign currency for low- and middle-income countries. This is because the COVID-19 pandemic is expected to cause a larger decline in foreign direct investment coming from high-income countries globally. The WB expressed concern that while research shows remittances help alleviate poverty, improve nutrition, increase education spending, and reduce child labor, the decrease in remittances will affect spending capacity in areas other than essential living items such as food.

David Malpass, President of the WB, said, "Remittances are an essential source of income for developing countries. It has become even more important to shorten the recovery period of developed countries," adding, "The WB is working to keep remittance channels open and protect access for poor regions."

This content was produced with the assistance of AI translation services.