Global remittances, or money sent back home by immigrants and migrant workers, has soared to a staggering $586 billion – a sum of money larger than the entire economies of countries like Uruguay, Kenya, Bulgaria or Guatemala, according to a study by the World Bank.

The study shows India continues to be the leading nation in remittances pulling in $70 billion from its global migrant workforce in 2014.

Remittances to the developing world are expected to reach $440 billion this year, an increase of 0.9 per cent over 2014, the study said.

When you include remittances to high income countries, the total amount is projected to grow by 0.4 per cent to $586 billion this year.

The United States, Saudi Arabia, Germany, Russia and the United Arab Emirates (UAE) remain the top five migrant destination countries and apart from India, China, Philippines, Mexico and Nigeria are the top five remittance recipient countries, in terms of value of remittances, the report said.

“Total remittances in 2014 reached $583 billion. This is more than double the ODA in the world. India received $70 billion, China $64 billion, the Philippines $28 billion. With new thinking these mega flows can be leveraged to finance development and infrastructure projects,” said Mr Kaushik Basu, World Bank Chief Economist and Senior Vice President.

“Israel and India have shown how macro liquidity crises can be managed by tapping into the wealth of diaspora communities. Mexican migrants have boosted the construction sector. Tajikistan manages to nearly double its consumption by using remittance money. Migrants and remittances are clearly major players in today’s global economy,” Mr Basu said.

The World Bank’s study of remittance, the money workers and professionals working in foreign lands send back to their native countries, attributed this mainly to weak economic growth in Europe, deterioration of the Russian economy and the depreciation of the euro and rouble.

In line with the expected global economic recovery next year, the global flows of remittances are expected to accelerate by 4.1 per cent in 2016, to reach an estimated $610 billion, rising to $636 billion in 2017.

Remittance flows to developing countries are expected to recover in 2016 to reach $459 billion, rising to $479 billion in 2017, the study said.

The global average cost of sending $200 held steady at 8 per cent of the value of the transaction, as of the last quarter of 2014.

Despite its potential to lower costs, the use of mobile technology in cross-border transactions remains limited, due to the regulatory burden related to combating money laundering and terrorism financing, the report said.

International remittances sent via mobile technology accounted for less than two per cent of remittance flows in 2013, according to the latest available data.

In addition to sending money to their families, international migrants hold significant savings in their destination countries. ‘Diaspora savings’ attributed to migrants from developing countries were estimated at $497 billion in 2013, the latest data available.

“The moderation in the growth of remittances will be hard on many poor people. The affected countries may have to consider creative ways of smoothing the shock. Fortunately, migration and remittances can be leveraged forinnovative financing,” said Dilip Ratha, Lead Economist, Migration and Remittances, at the World Bank’s Development Prospects Group.

“As to long-term financing needs for the Post-2015 Development Goals, I would love to see a bullet train system in India, an international airport in Nigeria, another Suez Canal in Egypt, a hydro-project in Pakistan, a community development program in the Philippines, all financed by mobilising the power of remittances and diaspora savings,” Dr Ratha said.

Laurie Nowell
AMES Senior Journalist