In a report released yesterday, the World Bank showed that remittances will drop across the globe in 2020. We spoke to Dilip Ratha, Lead Economist, Migration and Remittances, Social Protection and Jobs Global Practice, to get his take on a report that makes for some difficult reading.
According to Dilip, what makes this crisis (with its forecasted 20% remittance decline) so unique and different from the 2008 global financial crisis (a 5% remittance decline) is that this is a truly global crisis and typical policy responses will not be sufficient.
There are three main drivers of the 20% forecast decline:
- Migrant workers are experiencing severe reductions in wages and employment rates in the host countries that are most affected by Covid-19.
- The fall in the oil prices is negatively impacting Russia, the largest source of remittances to Central Asia, and the Gulf countries, leading to a big decline in migrants’ employment and therefore remittances from these economies.
- Currency devaluations against the US dollar put downward pressure on remittances and any numbers reported in USD look even worse.
Although positive growth is expected for 2021, it will still be subdued as many Western countries will still be recovering from the Covid-19 crisis and high economic uncertainty will persist.
As Dilip puts it: “The world as a connected net has never been more evident than now. If migrants are vulnerable, so are we. National borders don’t keep viruses away.”