In Bangladesh, the remittances showed a brisk uptick in 2018 (15 percent), according to the World Bank’s latest Migration and Development Brief.
Bangladesh received $15.5 billion in remittance last year and secured the third position in Asia and 11th globally, says World Bank.
The Remittances to South Asia grew 12 percent to $131 billion in 2018, outpacing the 6 percent growth in 2017.
The upsurge was driven by stronger economic conditions in the United States and a pick-up in oil prices, which had a positive impact on outward remittances from some GCC countries.
Remittances grew by more than 14 percent in India, where a flooding disaster in Kerala likely boosted the financial help that migrants sent to families.
Remittances to low- and middle-income countries reached a record high in 2018, according to the World Bank.
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 percent 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.
Regionally, growth in remittance inflows ranged from almost 7 percent in East Asia and the Pacific to 12 percent 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).
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).
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 global average cost of sending $200 remained high, at around 7 percent in the first quarter of 2019, according to the World Bank’s Remittance Prices Worldwide database. Reducing remittance costs to 3 percent 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 percent.
Banks were the most expensive remittance channels, charging an average fee of 11 percent in the first quarter of 2019. Post offices were the next most expensive, at over 7 percent. 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 percent worldwide and as high as 4 percent in some countries in the last quarter of 2018.
On ways to lower remittance costs, Dilip Ratha, lead author of the Brief and head of KNOMAD, said, “Remittances are on track to become the largest source of external financing in developing countries. The high costs of money transfers reduce the benefits of migration. Renegotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance prices.”
The Brief notes that banks’ ongoing de-risking practices, which have involved the closure of the bank accounts of some remittance service providers, are driving up remittance costs.
The Brief also reports progress toward the SDG target of reducing the recruitment costs paid by migrant workers, which tend to be high, especially for lower-skilled migrants.
“Millions of low-skilled migrant workers are vulnerable to recruitment malpractices, including exorbitant recruitment costs. We need to boost efforts to create jobs in developing countries and to monitor and reduce recruitment costs paid by these workers,” said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank. The World Bank and the International Labour Organization are collaborating to develop indicators for worker-paid recruitment costs, to support the SDG of promoting safe, orderly, and regular migration.