WASHINGTON—Remittances to low- and middle-income countries reached a record high in 2018, according to the World Bank’s latest Migration and Development Brief.
The bank estimates that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018, an increase of 9.6% over the previous record high of $483 billion in 2017. Global remittances, which include flows to high-income countries, reached $689 billion in 2018, up from $633 billion in 2017, The World Bank said.
Regionally, growth in remittance inflows ranged from almost 7% in East Asia and the Pacific to 12% in South Asia. The overall increase was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from some Gulf Cooperation Council (GCC) countries and the Russian Federation. Excluding China, remittances to low- and middle-income countries ($462 billion) were significantly larger than foreign direct investment flows in 2018 ($344 billion), The World Bank said.
Among countries, the top remittance recipients were India with $79 billion, followed by China ($67 billion), Mexico ($36 billion), the Philippines ($34 billion), and Egypt ($29 billion).
Largest Source of External Financing
In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, to become their largest source of external financing, The World Bank said.
The global average cost of sending $200 remained high, at around 7% in the first quarter of 2019, according to the World Bank’s Remittance Prices Worldwide database. Reducing remittance costs to 3% by 2030 is a global target under Sustainable Development Goal (SDG) 10.7. Remittance costs across many African corridors and small islands in the Pacific remain above 10%.
Banks were the most expensive remittance channels, charging an average fee of 11% in the first quarter of 2019. Post offices were the next most expensive, at over 7%. Remittance fees tend to include a premium where national post offices have an exclusive partnership with a money transfer operator. This premium was on average 1.5% worldwide and as high as 4% in some countries in the last quarter of 2018.