WASHINGTON—Remittances to low- and middle-income countries (LMICs) withstood global headwinds in 2022, growing an estimated 5% to $626 billion, The World Bank reported.
This is sharply lower than the 10.2% increase in 2021, according to the latest World Bank Migration and Development Brief.
“Remittances are a vital source of household income for LMICs. They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households,” according to the World Bank. “Studies show that remittances help recipient households to build resilience, for example through financing better housing and to cope with the losses in the aftermath of disasters.”
According to the analysis, remittance flows to developing regions were shaped by several factors in 2022.
Rising Prices Being Felt
“A reopening of host economies as the COVID-19 pandemic receded supported migrants’ employment and their ability to continue helping their families back home,” the World Bank said. “Rising prices, on the other hand, adversely affected migrants’ real incomes.”
Also influencing the value of remittances is the appreciation of the ruble, which translated into higher value, in U.S. dollar terms, of outward remittances from Russia to Central Asia, The World Bank said.
Effect of Weaker Euro
“In the case of Europe, a weaker Euro had the opposite effect of reducing the U.S. dollar valuation of remittance flows to North Africa and elsewhere. In countries that experienced scarcity of foreign exchange and multiple exchange rates, officially recorded remittance flows declined as flows shifted to alternative channels offering better rates,” The World Bank said.
Remittances to Sub-Saharan Africa are estimated to have increased 5.2% compared with 16.4% last year. In other regions, remittance flows are estimated to have increased 10.3% to Europe and Central Asia, where rising oil prices and demand for migrant workers in Russia supported remittances, in addition to the currency valuation effect, The World Bank said.
Other Volumes
In Ukraine, remittance growth is estimated at 2%, lower than earlier projections as funds for Ukrainians were sent to countries hosting them, and hand-carried money transfers likely increased. Growth in remittance flows is estimated at 9.3% for Latin America and the Caribbean, 3.5% in South Asia, 2.5% in the Middle East and North Africa, and 0.7% in East Asia and the Pacific. In 2022, for the first time a single country, India, is on track to receive more than $100 billion in yearly remittances, The World Bank said.
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