In­dia to re­tain top spot in re­mit­tances with $80 bil­lion in 2018: World Bank

Business Standard - - FRONT PAGE - PRESS TRUST OF IN­DIA

In­dia will re­tain its po­si­tion as the world's top re­cip­i­ent of re­mit­tances this year with its di­as­pora send­ing $80 bil­lion back home, the World Bank said in a re­port on Satur­day.

In­dia is fol­lowed by China ($67 bil­lion), Mex­ico and the Philip­pines ($34 bil­lion each) and Egypt ($26 bil­lion), ac­cord­ing to the global lender.

With this, In­dia has re­tained its top spot in re­mit­tances, ac­cord­ing to the lat­est edi­tion of the World Bank's Mi­gra­tion and Devel­op­ment Brief.

The Bank es­ti­mates that of­fi­cially recorded re­mit­tances to de­vel­op­ing coun­tries will in­crease by 10.8 per cent to reach $528 bil­lion in 2018. This new record level fol­lows a ro­bust growth of 7.8 per cent in 2017.

Global re­mit­tances, which in­clude flows to high-in­come coun­tries, are pro­jected to grow by 10.3 per cent to $689 bil­lion, it said.

Over the past three years, In­dia has reg­is­tered a sig­nif­i­cant flow of re­mit­tances from $62.7 bil­lion in 2016 to $65.3 bil­lion 2017. In 2017, re­mit­tances con­sti­tuted 2.7 per cent of In­dia's GDP, it said.

The Bank said re­mit­tances to South Asia are pro­jected to in­crease by 13.5 per cent to $132 bil­lion in 2018, a stronger pace than the 5.7 per cent growth rate in 2017.

The up­surge is driven by stronger eco­nomic con­di­tions in ad­vanced economies, par­tic­u­larly the US, and the in­crease in oil prices hav­ing a pos­i­tive im­pact on out­flows from some GCC coun­tries such as the the UAE which re­ported a 13 per cent growth rate in out­flows for the first half of 2018. Bangladesh and Pak­istan ex­pe­ri­enced strong upticks of 17.9 per cent and 6.2 per cent in 2018, re­spec­tively, the Bank said. For 2019, it is pro­jected that re­mit­tances growth for the re­gion will slow to 4.3 per cent due to a mod­er­a­tion of growth in ad­vanced economies, lower mi­gra­tion to the GCC and the ben­e­fits from the oil price spurt dis­si­pat­ing.

The Gulf Co­op­er­a­tion Coun­cil (GCC) is a re­gional in­ter-gov­ern­men­tal political and eco­nomic bloc of Bahrain, Kuwait, Oman, Qatar, Saudi Ara­bia, and the UAE.

As global growth is pro­jected to mod­er­ate, fu­ture re­mit­tances to low- and mid­dle-in­come coun­tries are ex­pected to grow moder­ately by four per cent to reach $549 bil­lion in 2019. Global re­mit­tances are ex­pected to grow 3.7 per cent to $715 bil­lion in 2019.

The Brief notes that the global av­er­age cost of send­ing $200 re­mains high at 6.9 per cent in the third quar­ter of 2018. Re­duc­ing re­mit­tance flows to three per cent by 2030 is a global tar­get un­der Sus­tain­able Devel­op­ment Goal (SDG) 10.7. In­creas­ing the vol­ume of re­mit­tances is also a global goal un­der the pro­pos­als for rais­ing fi­nanc­ing for the SDGs, it said.

"Even with tech­no­log­i­cal advances, re­mit­tances fees re­main too high, dou­ble the SDG tar­get of 3 per cent. Open­ing up mar­kets to com­pe­ti­tion and pro­mot­ing the use of low-cost tech­nolo­gies will ease the bur­den on poorer cus­tomers," said Mah­moud Mo­hieldin, se­nior vice-pres­i­dent for the 2030 Devel­op­ment Agenda, United Na­tions Re­la­tions, and Part­ner­ships at the Bank.

The av­er­age cost of re­mit­ting in South Asia was the low­est at 5.4 per cent, while SubSa­ha­ran Africa con­tin­ued to have the high­est at 9 per cent. No so­lu­tions are yet in sight for prac­tices that drive up costs, such as de-risk­ing ac­tion of banks, which lead to clo­sure of bank ac­counts of re­mit­tance ser­vice providers.

An­other per­sis­tent fac­tor that keeps fees high is the ex­clu­sive part­ner­ship be­tween na­tional post of­fice sys­tems and any sin­gle money trans­fer op­er­a­tor, as it al­lows the op­er­a­tor to charge higher fees to poorer cus­tomers de­pen­dent on post of­fices, the Bank said.

"The fu­ture growth of re­mit­tances is vul­ner­a­ble to lower oil prices, re­stric­tive mi­gra­tion poli­cies, and an over­all mod­er­a­tion of eco­nomic growth. Re­mit­tances have a di­rect im­pact on al­le­vi­at­ing poverty for many house­holds, and the World Bank is well po­si­tioned to work with coun­tries to fa­cil­i­tate re­mit­tance flows," said Michal Rutkowski, se­nior direc­tor of the So­cial Pro­tec­tion and Jobs Global Prac­tice at the World Bank.

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