Global remittances to slow down in 2015 say WorldBank report

Growth in global remittances, including those to developing countries, will slow sharply in 2015 due to weak economic growth in Europe, deterioration of the Russian economy and the depreciation of the euro and ruble, says the latest issue of the World Bank’s Migration and Development Brief.

Officially recorded remittances to the developing world are expected to reach USD 440bn in 2015, an increase of 0.9% over the previous year. Global remittances, including those to high income countries, are projected to grow by 0.4% to USD 586bn. The 2015 remittance growth rates are the slowest since the global financial crisis in 2008/09. Nonetheless, the number of international migrants is expected to exceed 250m in 2015, and their savings and remittances are expected to continue to grow.

The slowdown in the growth of remittances in 2015 will affect most developing regions, in particular Europe and Central Asia where flows are expected to decline by 12.7%. The positive impact of an economic recovery in the U.S. will be partially offset by continued weakness in the Euro Area, the impact of lower oil prices on the Russian economy, the strengthening of the US dollar, and tighter immigration controls in many remittance source countries.

In line with the expected global economic recovery in 2016, the global flows of remittances are expected to accelerate by 4.1% to reach an estimated USD 610bn, rising to USD 636bn in 2017. Remittance flows to developing countries are expected to recover in 2016 to reach USD 459bn, rising to USD 479bn in 2017. Looking at our region, growth of remittances to SSA are projected to slow to 0.9% in 2015, amounting to USD 33bn. Nigeria alone accounts for around two-thirds of total remittance inflows to the region, but its remittances are estimated to have remained flat in 2014, at roughly USD 21bn. The regional growth in remittances in 2014 largely reflected strong growth in Kenya (10.7%), South Africa (7.1%) and Uganda (6.8%).

Remittances in the Gambia, Lesotho, Liberia and Comoros equal about 20% of GDP in 2013, the latest available data. SSA remittance flows are expected to pick up to USD 34bn in 2016 and USD 36bn in 2017. In Somalia, concerns are rising about the impact on remittances due to “de-risking”– the closing of bank accounts of money transfer operators by correspondent banks fearing risks of money laundering and financial crime. Remittances remain a key source of funds for developing countries, far exceeding official development assistance and even foreign direct investment (excluding China), and according to the World Bank, have proved to be more stable than private debt and portfolio equity flows. They are also less volatile than official aid flows, and thus SSA governments should continue to look for ways to encourage these inflows (preferably through more formal channels) and harness them in a way that can benefit their development agendas.

The Migration and Development Brief report is available at http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/MigrationandDevelopmentBrief24.pdf