World Bank predicts slower pace for remittances

RemittancesRemittances to developing countries are expected to increase only slightly in 2016, says the World Bank’s latest paper on Migration and Development.

Remittances to low and middle income countries are expected to increase 0.8 percent to $442 billion, a release to the Ghana News Agency said.

The modest recovery this year is largely anchored on increases in remittances sent to Latin America and the Caribbean this follows a decline in the level of remittances recorded in 2015.

It said low oil prices continues to be a factor in reduced remittance flows from Russia and the Gulf Cooperation Council (GCC) countries adding that structural factors have also played a role in dampening remittances growth.

It said anti-money laundering efforts have prompted banks to close down accounts of money transfer operators, diverting activity to informal channels.

The release said policies favoring employment of nationals over migrant workers have discouraged demand for migrant workers in the GCC countries and exchange controls in countries from Nigeria to Venezuela have disrupted the flow of remittances.

It said global growth of remittances to developing countries is projected to remain modest at about 3.5 percent over the next two years and developing regions other than Latin America and the Caribbean are projected to have growth of 2 percent or lower.

The global average cost of sending $200 remained at 7.6 percent in the second quarter of 2016. Average costs have dropped from 9.8 percent in 2008.

The release said the highest-cost region to send money continues to be Sub-Saharan Africa at 9.6 percent while it is the least costly to send remittances to the South Asia region.

Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group, said “Remittances continue to be an important component of the global economy, surpassing international aid. However this “new normal” of weak growth in remittances could present challenges for millions of families that rely heavily on these flows.

He said “this, in turn, can seriously impact the economies of many countries around the world bringing on a new set of challenges to economic growth.”

The World Bank paper on “Migration and Development: A Role for the World Bank Group” provides an overview of the fundamental drivers of migration and the associated economic benefits and challenges.

It outlines a role for the World Bank Group and International Financial Institutions (IFIs) to take on in this area, thus complementing the New York Declaration on Refugees and Migrants agreed on at the United Nations (UN) Summit on Refugees and Migrants held on September 19, 2016.

It indicated IFIs can contribute to the global migration agenda by financing migration programs; addressing the fundamental drivers of migration; maximizing the benefits and managing the risks of migration in sending and receiving countries; and providing knowledge for informed policy making and improving public perceptions.

It noted that there are about 250 million international migrants and almost three times as many internal migrants. Out of these, there are 21.3 million refugees (including 5.2 million Palestinian refugees).

Although the number of refugees has increased considerably recently, it has not reached the historically high levels seen in the early 1990s.

Intra-regional migration is substantial and South-South migration outpaces South-North migration. Inequality, demographics and climate change continue to be the main drivers of economic migration.

Dilip Ratha, lead author of the paper and head of the Global Knowledge Partnership on Migration and Development (KNOMAD) said “Migration is overwhelmingly beneficial but there are some costs that biased public perceptions towards the negative. As the global community prepares to define a global compact on migration by 2018, game-changing ideas are needed to harness the benefits and mitigate the risks associated with migration.”

“Viewing migration through a common lens of reducing poverty and boosting prosperity can provide a unifying framework for a comprehensive response.”

Source: GNA

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