ADB: Covid to cut $100B from global remittances

THE global economy could lose more than $100 billion in remittances, warns a report by the Manila-based Japanese-led multilateral lender Asian Development Bank.

It adds that governments need to act fast to protect the most vulnerable in society from this loss of vital income.

Migrant workers are among the groups hardest hit by the Covid-19 pandemic, with many facing scant job security and limited access to social assistance, the report said.

Large-scale unemployment and wage reduction among migrant workers also threaten the wellbeing of many households in Asia and the Pacific who depend on remittances to meet their daily needs, it added.

“Based on our worst-case scenario, where the Covid-19 economic impact persists throughout t he year and dissipates half way in t he last t hree months of t he outbrea k, globa l remittances will fa ll by $108.6 billion in 2020, [an 18.3per-cent drop on expected remitta nces],” it said.

It added that remittances to Asia and the Pacific would fall by $54.3 billion, equivalent to 19.8 per cent of remittances in 2018.

By subregion, remittances in South Asia are expected to fall furthest, by $28.6 billion (24.7 per cent of 2018 receipts), followed by remittances to Central Asia ($3.4 billion, 23.8 per cent), Southeast Asia ($11.7 billion, 18.6 per cent), and East Asia ex-People’s Republic of China and Japan (1.7 billion, 16.2 per cent).

Remittances to the Pacific will also fall ($267 million, 13.2 per cent).

The majority of the decline in remittance flows to the region is explained by a $22.5 billion fall in remittances from the Middle East, which accounts for 41.4 per cent of the total remittance loss in Asia.

This is followed by a $20.5 billion slump in remittances from the US, (37.9 per cent of total). The fall in remittances from the EU and the UK accounts for 6.3 per cent of the total, or $3.4 billion.

The decline from Russia amounts to $2.1 billion, of which $2 billion reflects the decline in remittances going to Central Asia.

By percentage, the Middle East and Russia experienced the sharpest decline – over a third – primarily reflecting the effects of low demand and oil prices on remittances.