The World Bank (WB) has projected a 23% decline in remittances for Pakistan, totaling about $17 billion in 2020 compared with a total of $22.5 billion in 2019 due to the economic crisis induced by the COVID-19 pandemic and shutdown as well as decline in oil prices.
WB, in its latest report, “Migration and Development Brief: COVID-19 Crisis through a Migration Lens” stated that global remittances are projected to decline sharply by about 20 percent while South Asia is projected to witness 22 percent decline in remittances in 2020.
The report stated that to encourage remittance service providers (RSPs) to facilitate remittance inflows, some governments (notably that of Pakistan) have announced tax incentives equivalent to the remittance fees waived.
According to the report in Pakistan, the projected decline is about 23 percent, totaling about $17 billion, compared with a total of $22.5 billion in 2019, when remittances grew by 6.2 percent.
In India, remittances are projected to fall by about 23 percent in 2020, to $64 billion – a striking contrast with the growth of 5.5 percent and receipts of $83 billion seen in 2019.
In Bangladesh, remittances are projected at $14 billion for 2020, a likely fall of about 22 percent. Remittances to Nepal and Sri Lanka are expected to decline by 14 percent and 19 percent, respectively, in 2020.
The coronavirus‐related global slowdown and travel restrictions will also affect migratory movements, and this is likely to keep remittances subdued even in 2021. The projected remittance growth of 5.8 percent in 2021 will keep total regional flows at about $115 billion.
Remittances to South Asia are projected to decline sharply by 22 percent to $109 billion in 2020. This is a significant and unprecedented deceleration compared with the growth of 6.1 percent seen in 2019. The deceleration in remittances to the South Asian region in 2020 is driven by the global economic slowdown due to the coronavirus outbreak as well as oil price declines.
The economic slowdown is likely to directly affect remittance outflows from the United States, the United Kingdom, and EU countries to South Asia. Falling oil prices will affect remittance outflows from GCC countries and Malaysia.
South Asia was the least costly region to send $200 to (at 4.95 percent) in 2020 Q1. Some of the lowest‐cost corridors – including those originating in the GCC countries and Singapore, and the India‐Nepal corridor – had costs below the SDG target of 3 percent.
This is probably due to high volumes, competitive markets, and the deployment of technology. But costs are well over 10 percent in the highest‐cost corridors (UK to Afghanistan, Thailand to India, Pakistan to Afghanistan, Pakistan to Bangladesh, South Africa to India)) due to low volumes, little competition, and regulatory concerns.
Low and middle-income countries (LMIC) senders such as South Africa and Thailand also had high costs. Banking regulations (related to AML/CFT) raise the risk profile of RSPs, and thereby increase costs for some receiving countries such as Afghanistan and sending countries such as Pakistan, stated the report.
The report further stated that the coronavirus crisis has affected both international and internal migration in the South Asia region. As the early phases of the crisis unfolded, many international migrants, especially from the GCC countries, returned to countries such as India, Pakistan, and Bangladesh – until travel restrictions halted these flows.
Some migrants had to be evacuated by governments, such as those of China and Iran. Afghanistan also saw large flows of returnees from Iran (150,000) and Pakistan (60,000).
Before the coronavirus crisis, migrant outflows from the region were robust. The number of recorded, primarily low‐skilled emigrants from India and Pakistan rose in 2019 relative to the prior year but is expected to decline in 2020 due to the pandemic and oil price declines impacting the GCC countries. In Pakistan, the number of emigrants jumped 63 percent to 625,203 in 2019, largely due to a doubling of emigration to Saudi Arabia.