The pandemic is affecting the amount of money migrant workers can send home, with remittances projected to drop 7 percent this year to $508 billion and forecasted to drop a further 7.5 percent by 2021, according to a statement from the World Bank Thursday (Oct. 29).
Last year, migrants sent $548 billion in remittances, a record high, the statement noted. That’s larger than foreign direct investment flows at $534 billion and overseas development assistance at about $166 billion.
“The impact of COVID-19 is pervasive when viewed through a migration lens as it affects migrants and their families who rely on remittances,” said Mamta Murthi, vice president for Human Development and chair of the Migration Steering Group of the World Bank, in the statement. “The World Bank will continue working with partners and countries to keep the remittance lifeline flowing, and to help sustain human capital development.”
Remittance flows to low- and middle-income countries (LMICs) decline for a number of reasons, including a weak economy, weak oil prices, less jobs in migrant-hosting countries, and depreciation of the currencies of remittance-source countries against the U.S. dollar, according to the statement.
The steepest drops are anticipated in Europe with 16 percent and East Asia with 11 percent, according to the statement.
Although remittances are down for the World Bank, companies shifting to digital cross-border flows have seen a spike in business. It is expected that the sector will see continued growth in C2C digital-to-cash (and cash-to-digital) efforts.
PYMNTS September Smarter Money Tracker examined the compliance challenges faced by cross-border money transfer organizations and how regulatory tools can help keep remittances providers up to date.
Sam Tay, CEO of Aptiv8, a platform that supports foreign workers, told PYMNTS in the September Smarter Payments Tracker that the pandemic-driven adoption of digital remittances in Singapore can open the door to fraudsters.