The World Bank has predicted that there will be a 20 percent decline in global remittances in 2020. Amid economic volatility induced by the COVID-19 pandemic and the subsequent shutdown, money sent by foreign workers to individuals in their home country will fall in line with the decrease in wages and employment of migrant workers.
In what could potentially be the sharpest drop in global remittances in recent history, money sent to low and middle-income countries is expected to decrease by 19.7 percent to $445 billion. This comes after a record-breaking year in 2019 ($554 billion), representing a huge loss for vulnerable people.
At the time of this announcement, Dilip Ratha, Lead Economist, Migration and Remittances and Head of KNOMAD at The World Bank said: “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.”
In a webinar hosted by cross border payments network IAMTN this week, Ratha referenced the World Bank’s pessimistic projection and compared the current crisis to the financial crisis of 2007 and 2008, after which there was a five percent dip in remittance flows to low and middle income countries and continuous decline in regions like Latin America.
Ratha pointed out that although the 2007/8 crisis is known as the global financial crisis, the entire world was not affected equally. The same could be said for the Ebola crisis. He states that the closest in comparison to the coronavirus was the Spanish Flu, when 25 percent of the world’s population was impacted and in addition to this, there were peaks and troughs of the virus to consider.