WASHINGTON—The decline in remittances to developing countries will be much worse than the 5% drop recorded in the wake of the 2007-2009 global financial crisis, the Institute of International Finance (IIF) said.
In its Macro Notes report the trade group representing financial institutions said remittances could drop by 20-30% this year due to the economic shocks caused by the coronavirus pandemic, Business World reported.
The IIF said the current crisis is affecting more countries than in 2007-2009.
“During the global financial crisis (GFC), remittances fell by about 5%. As the COVID-19 recession affects even more countries simultaneously, especially host countries in the EM (emerging markets) universe, a drop of 20-30% seems possible,” IFF said.
The IIF said pressure on remittances “will be particularly challenging for countries with high external funding pressure where remittances help reduce otherwise large current account deficits, including most of Central America, Caribbean nations, as well the Philippines and Egypt.”