Back in April, early on in the pandemic, the World Bank came out with some numbers forecasting a 20% decline for 2020 for the sector. This past week, those numbers and their 2021 forecasts were updated.
The good news, and we don’t need the World Bank to forecast this, is that 2020 has not been as bad as initially forecasted. The results through the 10 months of the year for Western Union, MoneyGram and Ria look to be high single-digit declines for revenues (note the World Bank reports total cross-border principal estimates, not revenues).
For 2021, unfortunately, the World Bank forecasts a continued decline, wiping nearly $100bn of flows out of the market from the highs of 2019. Two main factors underpin the forecasts for 2021:
- The first is simply a continued weakened global economy. Fewer jobs and fewer migrants with income to remit home.
- The second is a continued weak oil price, much of which is the basis of the migrant economy in the Middle East and Russia.
We don’t envy the team at the World Bank. Trying to forecast in a world of so much uncertainty means only one thing: the numbers for 2021 will be wrong. How much so remains to be seen.