NEW YORK—Slower economic growth expectations has prompted Citi to slash its forecasts for global remittances.
Remittances could fall by $100 billion in the worse-case scenario, Citi said in a note to clients, while more than doubling its base case for the scale of decline to $68 billion in 2020. In mid-April, it had estimated that the amount of wages migrants would send home would shrink by some $28 billion this year, Channel News Asia reported.
“This would cause the biggest problems for countries with little fiscal space to mitigate the hit from falling remittances, which would increasingly force them to spend larger amounts to prop up their economies. That raises the risk that they become unable to meet all their debt obligations,” Channel News Asia said.
"Declines in remittances may have negative implications for the sovereign debt ratings of small EMs (emerging markets)," Citi's Dana Peterson wrote in a note to clients.