WASHINGTON—Officially recorded remittance flows to low- and middle-income countries (LMICs) are expected to increase by 4.2% this year to reach $630 billion.
This follows an almost record recovery of 8.6% in 2021, according to the World Bank’s latest Migration and Development Brief.
Perhaps not surprisingly, remittances to Ukraine, which is the largest recipient in Europe and Central Asia, are expected to rise by over 20% in 2022. However, remittance flows to many Central Asian countries, for which the main source is Russia, will likely fall dramatically, according to the forecast. These declines, combined with rising food, fertilizer, and oil prices, are likely to increase risks to food security and exacerbate poverty in many of these countries, The World Bank said.
“The Russian invasion of Ukraine has triggered large-scale humanitarian, migration and refugee crises and risks for a global economy that is still dealing with the impact of the COVID pandemic,” said Michal Rutkowski, global director of the social protection and jobs global practice at the World Bank. “Boosting social protection programs to protect the most vulnerable, including Ukrainians and families in Central Asia, as well as those affected by the war’s economic impact, is a key priority to protect people from the threats of food insecurity and rising poverty.”
During 2021, the World Bank reported remittance inflows saw strong gains in Latin America and the Caribbean (25.3%), Sub-Saharan Africa (14.1%), Europe and Central Asia (7.8%), the Middle East and North Africa (7.6%), and South Asia (6.9%). Remittances to East Asia and the Pacific fell by 3.3%; although excluding China, remittances grew 2.5%. Excluding China, remittance flows have been the largest source of external finance for LMICs since 2015, the report shows.
The Top Five
The top five recipient countries for remittances in 2021 were India, Mexico (replacing China), China, the Philippines, and Egypt. Among economies where remittance inflows stand at very high shares of GDP are Lebanon (54%), Tonga (44%), Tajikistan (34%), Kyrgyz Republic (33%), and Samoa (32%).
“On the one hand, the Ukraine crisis has shifted global policy attention away from other developing regions and from economic migration. On the other hand, it has strengthened the case for supporting destination communities that are experiencing a large influx of migrants,” said Dilip Ratha, lead author of the report on migration and remittances and head of KNOMAD. “As the global community prepares to gather at the International Migration Review Forum, the creation of a Concessional Financing Facility for Migration to support destination communities should be seriously considered. This facility could also provide financial support to origin communities experiencing return migration during the COVID-19 crisis.”
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