17 April, New Delhi
India retained its top slot in remittance at 69 billion dollars in 2015 as compared to 70 billion dollars a year ago, registering a fall of 1.4 per cent, the World Bank said in its report on ‘Migration and Remittances’.
The bank said weak oil prices and other factors strained the earnings of international migrants and their ability to send money home to their families.”Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries. However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges including nutrition, access to health care and education,” said Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group.
Meanwhile, the remittances to developing countries reported a growth of 0.4 per cent amounted to 431.6 billion dollars in the fiscal under review over 430 billion dollars in 2014.According to the report, the growth of remittances in 2015 slowed from eight per cent in 2014 to 2.5 per cent for Bangladesh, from 16.7 per cent to 12.8 per cent for Pakistan, and from 9.6 per cent to 0.5 per cent for Sri Lanka.Besides oil price slide, depreciation of major sending country currencies (for example, the euro, the Canadian dollar and Australian dollar) vis–vis the US dollar, might be playing a role.Remittances to Nepal rose dramatically in response to the massive earthquake there, by 20.9 per cent in 2015 versus 3.2 per cent in 2014.
Also, many migrant workers returned to take care of their families, as the average number of returns at the airport jumped five times to around 4,000 per day, it said.Remittances to Pakistan, Sri Lanka, Nepal and Bangladesh exceeded six per cent of their respective gross domestic product in 2014. The bank also said the growth pace in 2015 was the slowest since the global financial crisis of 2008-09.However, the global remittances, which include those to high-income countries, contracted by 1.7 per cent to 581.6 billion dollars in 2015 from 592 billion dollars in 2014.
The slowdown in remittances growth, which began in 2012, was exacerbated last year by low oil prices and weakening of ruble and euro.Remittances contracted by 20 per cent to countries in the Europe and Central Asia region, with the heaviest impacts on Tajikistan and Ukraine, as a struggling Russian economy, and depreciation of the Russian ruble against the dollar contributed to the decline in remittances to the region.
However, it is being expected that the remittance flow would recover this year, after a bottoming out in 2015, with growth driven by continued economic recovery in the United States and the Euro Area, and a stabilisation of US dollar exchange rates of remittance-source countries. In addition to currency movements, oil prices are a key downside risk to this outlook.