According to the latest edition of the World Bank briefing note on migration and developmentremittances to low- and middle-income countries have stalled in 2023. They are estimated to have amounted to 656 billion euros, whereas they had increased significantly over the period 2021-2022.
This modest increase of 0.7 percent reflects the wide disparities in regional growth, but remittances remain a key source of external financing for developing countries in 2023, supporting the current account of several countries struggling with food insecurity and debt problems. In 2023, remittances exceeded the amount of foreign direct investment and official development assistance.
Remittances to low- and middle-income countries are projected to grow at a faster pace of 2.3 percent in 2024, although this growth will be uneven across regions. Potential downside risks to the projections would come from weaker-than-expected economic growth in high-income migrant-receiving countries and volatility in oil prices and exchange rates.
“Migration and resulting remittances are key drivers of economic and human developmentexplains Iffath Sharif, global director of the Social Protection and Employment division at the World Bank. Many countries are seeking to organize migration in the face of global demographic imbalances and labor shortages on the one hand, and high unemployment rates and skills shortages on the other. We are working to establish partnerships between migrant sending and receiving countries to facilitate training, particularly for young people, so that they acquire the skills needed to obtain better jobs and income in their countries of origin. origin and destination. »
In 2023, migration remittances increased mainly towards Latin America and the Caribbean (7.7%), South Asia (5.2%) and East Asia and the Pacific (4.8%). %, excluding China). In contrast, remittances to sub-Saharan Africa saw a slight decrease of 0.3%, while the Middle East and North Africa saw a drop of almost 15%, and Europe and Central Asia a drop of 10.3%.
“The resilience of remittances highlights their importance for millions of people, says Dilip Ratha, economist and lead author of the report. Leveraging remittances to promote financial inclusion and access to capital markets can improve the development prospects of recipient countries. This is why the World Bank seeks to reduce associated costs and facilitate official flows by mitigating political and commercial risks, in order to promote private investment in this sector. »
Sending remittances is still too expensive. In the fourth quarter of 2023, the global average cost of sending $200 was 6.4%, up slightly from 6.2% the previous year and well above the SDG target of 3%. The cost of digital transfers was lower: 5% compared to 7% for traditional methods, highlighting the benefits of technological advances in reducing the financial burden on migrants.
Given the growing importance of remittances, collecting accurate data is essential to support the United Nations Sustainable Development Goals of lowering costs and increasing volumes. However, statistical data are still inconsistent and incomplete. The overall gap between inbound and outbound flows has widened, as informal channels are a major factor, with migrants carrying cash with them when they return home. The International Working Group to Improve Data on Remittances Flows (RemitStat) will publish a report later this year with recommendations for improving data quality.
