Remittances to developing countries to decline

Remittance flows to developing countries are expected to decline by 7.3 percent in 2009 to US$304 billion in 2009, down from an estimated $328 billion in 2008, said the World Bank.

This predicted decline is far smaller than that of investment to developing countries as remittances are relatively resilient because while new migration flows have declined, the number of migrants living overseas has been relatively unaffected by the crisis, according to the World Bank.

However, there could be risk to the outlook including uncertainty about the depth and duration of the current crisis, unpredictable movements in exchange rates, and the possibility that immigration controls may be tightened further in major destination countries.

"There is a risk that rising unemployment will trigger further immigration restrictions in major destination countries. Such restrictions would curb remittances more than forecast and would slow the global recovery in the same way as protectionism against trade would endanger a global upturn," explained Hans Timmer, Director of the World Bank's Development Prospects Group.

Compared to Latin America and Sub-Saharan Africa, flows to South Asia and East Asia have been strong; but remittances are expected to decline somewhat in 2009. India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries.

Smaller economies such as Tajikistan, Moldova, Tonga, Lesotho, and Guyana are the top recipients in terms of the share of remittances in GDP; which exceeded a quarter of their GDP.

Source: eKantipur