Connect with us

News

World Bank Predicts Sharpest Decline of Remittances in Recent History

Published

on

Global remittances are projected to decline sharply by about 20 percent in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.

Studies show that remittances alleviate poverty in lower- and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labor in disadvantaged households. A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.

Remittances are a vital source of income for developing countries. 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,” said World Bank Group President David Malpass. “Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”

The World Bank is assisting member states in monitoring the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affect remittance flows. It is working with the G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.

Remittance flows are expected to fall across all World Bank Group regions, 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 large decline in remittances flows in 2020 comes after remittances to LMICs reached a record $554 billion in 2019. Even with the decline, remittance flows are expected to become even more important as a source of external financing for LMICs as the fall in foreign direct investment is expected to be larger (more than 35 percent). In 2019, remittance flows to LMICs became larger than FDI, an important milestone for monitoring resource flows to developing countries.

In 2021, the World Bank estimates that remittances to LMICs will recover and rise by 5.6 percent to $470 billion. The outlook for remittance remains as uncertain as the impact of COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease. In the past, remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship back home. This time, however, the pandemic has affected all countries, creating additional uncertainties.

Effective social protection systems are crucial to safeguarding the poor and vulnerable during this crisis in both developing countries as well as advanced countries. In host countries, social protection interventions should also support migrant populations,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

The global average cost of sending $200 remains high at 6.8 percent in the first quarter of 2020, only slightly below the previous year. Sub-Saharan Africa continued to have the highest average cost, at about 9 percent, yet intra-regional migrants in Sub-Saharan Africa comprise over two-thirds of all international migration from the region.

Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families. These include treating remittance services as essential and making them more accessible to migrants,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.


Regional Remittance Trends

Remittance flows to the East Asia and Pacific region grew by 2.6 percent to $147 billion in 2019, about 4.3 percentage points lower than the growth rate in 2018. In 2020, remittance flows are expected to decline by 13 percent. The slowdown is expected to be driven by declining inflows from the United States, the largest source of remittances to the region. Several remittance-dependent countries such as those in the Pacific Islands could see households at risk as remittance incomes decline over this period. A recovery of 7.5 percent growth for the region is anticipated in 2021. Remittance costs: The average cost of sending $200 to the East Asia and Pacific region dropped to 7.13 percent in the first quarter of 2020, compared to the same quarter in 2019. The five lowest cost corridors in the region averaged 2.6 percent while the five highest cost corridors averaged 15.4 percent as of 2019 Q4.

Remittances to countries in Europe and Central Asia remained strong in 2019, growing by about 6 percent to $65 billion in 2019. Ukraine remained the largest recipient of remittances in the region, receiving a record high of nearly $16 billion in 2019. Smaller remittance-dependent economies in the region, such as Kyrgyz Republic, Tajikistan, and Uzbekistan, particularly benefited from rebound of economic activity in Russia. In 2020, remittances are estimated to fall by about 28 percent due to the combined effect of the global coronavirus pandemic and lower oil prices. Remittance costs: The average cost of sending $200 to the ECA region declined modestly to 6.48 percent in the first quarter of 2020 from 6.67 percent a year earlier. The differences in costs across corridors in the region are substantial; the highest costs for sending remittances were from Turkey to Bulgaria, while the lowest costs for sending remittances were from Russia to Azerbaijan.

Remittances flows into Latin America and the Caribbean grew 7.4 percent to $96 billion in 2019. Growth in inflows was uneven across countries in the region. Brazil, Guatemala and Honduras saw a rise in remittances of more than 12 percent in 2019. Colombia, Ecuador, Nicaragua and Panama had an increase of more than 6 percent, while remittances to Bolivia and Paraguay declined by 3.8 percent and 2.2 percent, respectively. In 2020, remittance flows to the region is estimated to fall by 19.3 percent. Remittance costs: The average cost of sending $200 to the region was 5.97 percent in the first quarter of 2020. Amid the COVID-19 crisis, the costs of transferring remittances to the region could increase due to operational challenges being faced by remittance service providers (closures of agents and offices, access to cash, foreign exchange, security) and compliance with AML/CFT regulations.

Remittances to the Middle East and North Africa region are projected to fall by 19.6 percent to $47 billion in 2020, following the 2.6 percent growth seen in 2019. The anticipated decline is attributable to the global slowdown as well as the impact of lower oil prices in GCC countries. Remittances from the euro area would also be impacted by the area’s pre-COVID-19 economic slowdown and the depreciation of the euro against the U.S. dollar. In 2021, remittances to the region is expected to recover, albeit at a slow pace of around 1.6 percent due to projected moderate growth in the euro area and weak GCC outflows. Remittance costs: The cost of sending $200 to the region was 7 percent, largely unchanged from the previous year. Costs vary greatly across corridors. The cost of sending money from high-income OECD countries to Lebanon continues to be in the double digits. Sending money from GCC countries to Egypt and Jordan costs between 3 percent to 5 percent in some corridors. The Saudi Arabia to Syria corridor has experienced a dramatic fall in costs as the civil war in Syria has receded.

Remittances to South Asia are projected to decline by 22 percent to $109 billion in 2020, following the growth of 6.1 percent in 2019. The deceleration in remittances to the South Asian region in 2020 is driven by the global economic slowdown due to the coronavirus outbreak as well as oil price declines. The economic slowdown is likely to directly affect remittance outflows from the United States, the United Kingdom, and EU countries to South Asia. Falling oil prices will affect remittance outflows from GCC countries and Malaysia. Remittance costs: South Asia had the lowest average remittance costs of any region, at 4.95 percent. Some of the lowest-cost corridors had costs below the 3 percent SDG target. This is probably due to high volumes, competitive markets, and deployment of technology. But costs are well over 10 percent in the highest-cost corridors due to low volumes, little competition, and regulatory concerns. Banking regulations related to AML/CFT raise the risk profile of remittance service providers and thereby increase costs for some receiving countries such as Afghanistan and sending countries such as Pakistan.

Remittances to Sub-Saharan Africa registered a small decline of 0.5 percent to $48 billion in 2019. Due to the COVID-19 crisis, remittance flows to the region are expected to decline by 23.1 percent to reach $37 billion in 2020, while a recovery of 4 percent is expected in 2021. The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside including in the EU area, the United States, the Middle East, and China. These large economies host a large share of Sub-Saharan African migrants and combined, are a source of close to a quarter of total remittances sent to the region. In addition to the pandemic’s impact, many countries in the Eastern Africa region are experiencing a severe outbreak of desert locusts attacking crops and threatening the food supply for people in the region. Remittance costs: Sending $200 remittances to the region cost 8.9 percent on average in the first quarter of 2020, a modest decrease compared with the average cost of 9.25 percent a year before. The most expensive corridors are observed mainly in the Southern African region, with costs as high as 20 percent. At the other end of the spectrum, the less expensive corridors had average costs of less than 3.6 percent.

Continue Reading
Comments

Human Rights

Israel: ‘Halt and reverse’ new settlement construction

Published

on

A little boy stands on the remains of his family's demolished home in the West Bank. (File) UNRWA/Lara Jonasdottir

Israel’s decision to advance plans for some 800 new settlement units, most of which are located deep inside the occupied West Bank, has sparked the concern of UN Secretary-General António Guterres. 

In a statement issued on Monday by his spokesperson, Stephane Dujarric, the UN chief urged the Israeli Government to “halt and reverse such decisions”, calling them “a major obstacle to the achievement of the two-State solution, and a just, lasting and comprehensive peace”. 

‘No legal validity’ 

Mr. Guterres reiterated that Israel’s establishing of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, “has no legal validity and constitutes a flagrant violation under international law”. 

“Settlement expansion increases the risk of confrontation, further undermines the right of the Palestinian people to self-determination, and further erodes the possibility of ending the occupation and establishing a contiguous and viable sovereign Palestinian State, based on the pre-1967 lines”, he said. 

Pushing forward 

Israel has given the green light to 780 new homes in West Bank settlements on Sunday in a move widely seen as being influenced by the imminent transfer of power in the United States. 

Breaking with decades of US diplomacy, outgoing President Donald Trump, in 2019 unilaterally declared that the settlements no longer breached international law. 

Against that backdrop, Israel has been increasing construction and either approved or made plans for more than 12,000 homes in 2020, according to news reports.

Continue Reading

Health & Wellness

WHO chief warns against ‘catastrophic moral failure’ in COVID-19 vaccine access

Published

on

A “me-first approach” to COVID-19 vaccines on the part of some countries and manufacturers is putting equitable access to these lifesaving treatments at risk, the head of the World Health Organization (WHO) warned on Monday. 

Addressing the agency’s Executive Board, WHO chief Tedros Adhanom Ghebreyesus expressed fear that “even as vaccines bring hope to some, they become another brick in the wall of inequality between the world’s haves and have-nots.” 

Describing the rapid development of vaccines as a literal and figurative “shot in the arm” during the pandemic, Tedros reported that while 39 million doses have been administered in nearly 50 richer countries, only 25 have been given in one lowest income nation. 

A self-defeating approach  

“I need to be blunt: the world is on the brink of a catastrophic moral failure – and the price of this failure will be paid with lives and livelihoods in the world’s poorest countries”, he said, speaking from WHO headquarters in Geneva. 

Ensuring all countries will have access to any COVID-19 vaccines is the promise of a global mechanism established last April, known as the COVAX Facility. It has secured two billion doses so far, with a billion more in the pipeline, and deliveries should begin next month. 

“Even as they speak the language of equitable access, some countries and companies continue to prioritize bilateral deals, going around COVAX, driving up prices and attempting to jump to the front of the queue. This is wrong”, Tedros stated. 

Additionally, most manufacturers also have prioritized regulatory approval in rich countries, where profits are higher, rather than submitting their dossiers to WHO for prequalification. 

“This could delay COVAX deliveries and create exactly the scenario COVAX was designed to avoid, with hoarding, a chaotic market, an uncoordinated response, and continued social and economic disruption”, he said. 

“Not only does this me-first approach leave the world’s poorest and most vulnerable people at risk, it’s also self-defeating.” 

Change the rules of the game 

Underlining that vaccine equity also has economic benefits, Tedros urged countries to “work together in solidarity” to ensure inoculation of all health workers and older people at most risk worldwide is underway, within the first 100 days of the year. 

He pressed for action in three areas to “change the rules of the game”, starting with an appeal for transparency in any bilateral contracts between countries and COVAX, including on volumes, pricing and delivery dates. 

“We call on these countries to give much greater priority to COVAX’s place in the queue, and to share their own doses with COVAX, especially once they have vaccinated their own health workers and older populations, so that other countries can do the same”, he said. 

Tedros also called for vaccine producers to provide WHO with full data for regulatory review in real time, to accelerate approvals, and he urged countries to only use vaccines that have met international safety standards, and to accelerate readiness for their deployment.  

“My challenge to all Member States is to ensure that by the time World Health Day arrives on the 7th of April, COVID-19 vaccines are being administered in every country, as a symbol of hope for overcoming both the pandemic and the inequalities that lie at the root of so many global health challenges”, he said, adding, “I hope this will be realized.” 

‘Vaccinationalism’ threatens recovery: UN chief

UN Secretary-General António Guterres has again stressed that COVID-19 vaccines must be a global public good, available to everyone, everywhere. 

Speaking in New York at a ceremony for the world’s developing nations, he underlined the need for funding for medicines and diagnostics to defeat the virus. 

“We need manufacturers to step up their commitment to work with the COVAX facility and countries around the world, in particular the world’s leading economies, to ensure enough supply and fair distribution,” said Mr. Guterres. 

“‘Vaccinationalism’ is self-defeating and would delay a global recovery.” 

The Secretary-General said recovery also represents a chance to “change course”, away from the old “normal” of inequalities and injustices, and he continues to advocate for greater support from developed countries and international financial institutions. 

“With smart policies and the right investments, we can chart a path that brings health to all, revives economies and builds resilience,” he said. “But developing countries must have the necessary resources to do so.”

Continue Reading

Health & Wellness

UN agencies supporting mammoth India COVID-19 vaccine rollout

Published

on

Health workers pose with a vial of COVID-19 vaccine after receiving their shots at a hospital in India. UNICEF/Vinay Panjwani

India has begun what is the world’s biggest COVID vaccination campaign so far, deploying hundreds of thousands of health workers, with the training and support of the UN World Health Organization (WHO). 

On 16 January, the first day of the campaign, 207,229 vaccine shots were given across the country, one of the worst-hit by COVID-19, with over 10 million COVID-19 infections and 150,000 deaths. 

“[We] provided technical assistance to the Government of India for the development of operational guidelines and other training materials for state and district programme managers and vaccinators, and establishing tracking and accountability frameworks”, Roderico H. Ofrin, WHO Representative in India said. 

“WHO field officers have facilitated the highest-level oversight through regular task force meetings at state and district levels, which are chaired by the Principal Secretaries (Health) at the state level, and District Magistrates at the district level”, he added. 

According to media reports, an estimated 10 million health workers are targeted to be vaccinated in the first round, followed by other front-line workers such as police, security forces and municipal staff, with plans to inoculate 300 million people by August. 

Supporting preparations 

Prior to the start of the campaign, UN agencies help with detailed preparations. 

For its part, WHO participated in dry-run simulations and provided feedback on management of vaccines, registration of beneficiaries, as well as reporting on vaccination coverage and adverse events following immunization. 

It also worked with the Government and the UN Development Programme (UNDP) on real-time reporting and problem-solving when issues arose at the vaccination sites, according to Dr. Ofrin. 

At the provincial level, WHO also supported implementation and monitoring of health policy, such as developing standard operating procedures, preparing technical briefs, and providing best practices from other parts of the India as well as other countries. 

Reliable information 

Similarly, the UN Children’s Fund (UNICEF) supported communication and advocacy efforts to ensure the dissemination of factual information to stakeholders and communities. The agency also helped train healthcare staff in infection control and prevention, and psychosocial support to children and caregivers.  

Aside from directly supporting vaccine rollout, UN agencies continued their programmes to assist the most vulnerable communities impacted by COVID-19 and its socio-economic fallouts.  

For instance, the UN World Food Programme (WFP) supported NGOs in order to identify and register some 19,000 vulnerable households and distributed food packets; while the UN Population Fund (UNFPA) conducted awareness raising programmes on sexual and reproductive health, and prevention of gender-based violence, on behalf of some 30 million vulnerable individuals.  

The three W’s  

Though vaccination programmes are underway, continued vigilance against COVID-19 and preventing its spread remain as important as ever. 

WHO’s Dr. Ofrin urged continued vigilance over tracking cases, cluster investigation, isolation and clinical care, and quarantining to break the chain of transmission. 

Alongside, he also highlighted the “three W’s – wear a mask, wash your hands and watch your distance.” 

“These efforts must continue to stop the spread of COVID-19. We as individuals and communities must work with the Government to save lives and the economy by protecting health and livelihoods,” he added.

Continue Reading

Publications

Latest

Trending