India, the world’s largest remittance recipient in 2015, may receive a remittance of $65.5 billion this year, a drop of 5 per cent, the World Bank has said in a new report citing weak economic growth in remittances-source countries and cyclic low oil prices.
“In 2016, remittance flows are expected to decline by 5 per cent in India and 3.5 per cent in Bangladesh, whereas they are expected to grow by 5.1 per cent in Pakistan and 1.6 per cent in Sri Lanka,” the World Bank said in a latest report on remittances.
Despite the drop, India is likely to top the list of countries receiving remittance.
The World Bank said in 2016, India is expected to receive a remittance of $65.5 billion, followed by China ($65.2 billion). Pakistan positioned at number five is estimated to receive $20.3 billion in 2016.
The World Bank said remittances to South Asia is expected to decline by 2.3 per cent in 2016, following a 1.6 per cent decline in 2015.
This is attributed mainly due to weak economic growth in remittances-source countries and cyclic low oil prices.
India retained its top spot in 2015, attracting about $69 billion in remittances, the World Bank had said.
Remittances from the GCC countries continued to decline due to lower oil prices and labour market ‘nationalisation’ policies in Saudi Arabia.
Gulf Cooperation Council (GCC) is an alliance of six Middle Eastern countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.
It said against a backdrop of tepid global growth, remittance flows to low and middle income countries (LMICs) seem to have entered a “new normal” of slow growth.
In 2016, remittance flows to LMICs are projected to reach $442 billion, marking an increase of 0.8 per cent over 2015.
The modest recovery in 2016 is largely driven by the increase in remittance flows to Latin America and the Caribbean on the back of a stronger economy in the US; by contrast remittance flows to all other developing regions either declined or recorded a deceleration in growth, the bank said.
The Bank said low oil prices continued to be a factor in reduced remittance flows from Russia and the GCC countries.
In addition, structural factors have also played a role in dampening remittances growth.
Anti-money laundering efforts have prompted banks to close down accounts of money transfer operators, diverting activity to informal channels, it added.
“Remittances continue to be an important component of the global economy, surpassing international aid. However this “new normal” of weak growth in remittances could present challenges for millions of families that rely heavily on these flows.
“This, in turn, can seriously impact the economies of many countries around the world bringing on a new set of challenges to economic growth,” said Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group.