This archive report was first published on 22 April 2020.
As the COVID-19 pandemic continues to spread globally, the World Bank has warned of a record decline in remittances, with a projected 20% drop in 2020. This decline, the sharpest in recent history, is largely attributed to a fall in wages and employment of migrant workers, who are more vulnerable to economic crises in host countries.
Remittances to low- and middle-income countries (LMICs) are expected to fall by 19.7% to $445 billion, resulting in a loss of a crucial financing lifeline for many vulnerable households. Studies have shown that remittances alleviate poverty, improve nutritional outcomes, and reduce child labor in disadvantaged households.
The pandemic's impact is expected to be felt across all World Bank Group regions, with the largest declines projected in Europe and Central Asia (27.5%), Sub-Saharan Africa (23.1%), and South Asia (22.1%). Remittance flows to Latin America and the Caribbean, the Middle East and North Africa, and East Asia and the Pacific are also expected to decline, albeit at a slower pace.
Despite the decline, the global average cost of sending $200 remains high at 6.8% in the first quarter of 2020. Sub-Saharan Africa continues to have the highest average cost, at around 9%, with intra-regional migrants comprising over two-thirds of all international migration from the region.
Remittances to Sub-Saharan Africa registered a small decline of 0.5% to $48 billion in 2019. However, due to the COVID-19 crisis, remittance flows to the region are expected to decline by 23.1% to reach $37 billion in 2020, before recovering by 4% in 2021.
