By - Paisafatafat Blog
Remittances to Southern Asia are predicted to swing down by 22% highlighting economic disruptions from COVIID 19 and the subsequent lockdown. Many expat Indians earning in overseas destinations have faced income loss in this low point of economy. India is the largest remittance receiver and this boosts foreign exchange reserves as well as funds its account deficits.
It’s estimated that India received 83.1 billion USD from overseas citizens in 2019. The foreign exchange reserves of India amount to 746 billion dollars that builds stability in spite of huge portfolio outflows.
As stated by the World Bank, International declination of remittances is predicted to the tune of 20% from the 714.2 billion USD figure in 2019. This expected fall is the highest in past history and is caused due to wage cuts and employment issues of migrant workers. Europe and central Asia will experience remittance drop of 28% while south Asia experiences a drop of 22%. Bangladesh and Pakistan also have many citizens working in overseas destinations and are likely to be deeply affected. Oil producing countries like UAE and Arabia will suffer from crude oil price decline and this will affect remittance flow. Incidentally remittance flows are crucial for many low-middle income countries.
World Bank Group President David Malpass said that COVID induced recession is affecting the ability of fund transfers back home and advanced economies need to recuperate fast to counter this. Remittances help people afford basic needs like food and healthcare and therefore it’s the World Bank’s prerogative to keep remittance channels open for serving poorest of communities.
LMIC will depend even more heavily on remittances as external financing like FDI dries up …says the World Bank. Money Transfers will also become more expensive. The standard cost of transferring 200 USD is high at 6.8% as of 2020’s first quarter and it’s only slightly lower than 2019’s rate.