Remittances to low- and middle-income countries (LMICs) withstood global headwinds in 2022, growing an estimated 5% to $626 billion, said the World Bank.
This is sharply lower than the 10.2% increase in 2021, according to the latest World Bank Migration and Development Brief, said a press release on Wednesday (30 November).
Studies show that remittances help recipient households to build resilience, for example through financing better housing and to cope with the losses in the aftermath of disasters.
Remittance flows to developing regions were shaped by several factors in 2022.
While the reopening of economies as the pandemic receded helped with employment, rising costs "adversely affected migrants' real incomes," the Washington-based development lender said.
Also influencing the value of remittances is the appreciation of the ruble, which translated into higher value, in US dollar terms, of outward remittances from Russia to Central Asia. In the case of Europe, a weaker euro had the opposite effect of reducing the US dollar valuation of remittance flows to North Africa and elsewhere. In countries that experienced scarcity of foreign exchange and multiple exchange rates, officially recorded remittance flows declined as flows shifted to alternative channels offering better rates.
"Migrants help to ease tight labor markets in host countries while supporting their families through remittances. Inclusive social protection policies have helped workers weather the income and employment uncertainties created by the Covid-19 pandemic. Such policies have global impacts through remittances and must be continued," said Michal Rutkowski, World Bank global director for Social Protection and Jobs.
And in 2023, the increase of such remittance flows is projected to slow further to 2%, as GDP growth in wealthier countries moderates.
"Downside risks remain substantial, including a further deterioration of the war in Ukraine, volatile oil prices and currency exchange rates, and a deeper-than-expected downturn in major high-income countries," said the World Bank in its report.
Meanwhile, rising oil prices and continued demand for migrant workers boosted remittances to Central Asian countries, while the ruble's appreciation against the US dollar translated into higher value of outward transfers.
But in Europe, a weaker euro had the opposite effect, the report said.
In Ukraine, remittance growth is pegged at 2%, lower than earlier estimates "as funds for Ukrainians were sent to countries hosting them, and hand-carried money transfers likely increased," the bank added.
Meanwhile, India is on track to receive over $100 billion in yearly remittances in 2022.