COVID-19: Sharp decline of remittance, predicts World Bank
COVID-19: Sharp decline of remittance, predicts World Bank
As the world faces economic challenges due to the impact of COVID-19, the Work Bank predicts a sharp decline in remittance in 2020.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass.
“Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
Remittances to the Middle East and North Africa
In 2019, the Middle East and North Africa saw a growth of 2.6%, however due to the current economic climate — a result of the current pandemic outbreak and lower oil prices — the region is projected to see a fall of 19.6% in 2020 to US$47bn.
Compared to 2019, the cost of remittance for sending US$200 has largely unchanged from 7.0%. “Costs vary greatly across corridors,” stated the World Bank.
“The cost of sending money from high-income OECD countries to Lebanon continues to be in the double digits. Sending money from GCC countries to Egypt and Jordan costs between 3% to 5% in some corridors. The Saudi Arabia to Syria corridor has experienced a dramatic fall in costs as the civil war in Syria has receded.”
Remittance in 2021 is expected to recover, albeit at a slower pace of roughly 1.6%.
Remittances to Sub-Saharan Africa
In 2019, Sub-Saharan Africa faced a small decline of 0.5% to US$48bn in 2019. However, due to the impact of COVID-19 the region is expected to see a decline of 23.1% in 2020 reaching US$37bn. A recovery of 4% is expected in 2021.
The expected decline can be attributed to a combination of factors driven by the coronavirus outbreak. In addition to the pandemic’s impact, many countries in the Eastern Africa region are experiencing a severe outbreak of desert locusts threatening the food supply.
In the first quarter of 2020, sending US$200 in remittance cost 8.9%, a decrease compared to 9.25% in 2019.
“The most expensive corridors are observed mainly in the Southern African region, with costs as high as 20%. At the other end of the spectrum, the less expensive corridors had average costs of less than 3.6%.”
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