World Bank says remittance flows continue to grow in the Caribbean

WASHINGTON, CMC – The World Bank says remittance flows continue to grow in the Caribbean and other places, albeit at a slower pace.

The Washington-based financial institution said that remittances to low- and middle-income countries (LMICs), such as those in the Caribbean, grew an estimated 3.8 per cent in 2023, “a moderation from the high gains of the previous two years.”

“Of concern is the risk of decline in real income for migrants in 2024 in the face of global inflation and low growth prospects,” says the World Bank's latest “Migration and Development Brief” released on Monday.

It states that, in 2023, remittance flows to LMICs are estimated to have reached US$669 billion “as resilient labour markets in advanced economies and Gulf Cooperation Council (GCC) countries continue supporting migrants' ability to send money home.”

By region, the document notes that remittance inflows grew for Latin America and the Caribbean by eight per cent, South Asia 7.2 percent, East Asia and the Pacific, three per cent and 1.9 per cent for Sub-Saharan Africa.

The report notes that based on the trajectory of weaker global economic activity, growth of remittances to LMICs is expected to soften further to 3.1 percent in 2024.

“Driving the moderated forecast are a slowing economic growth and the prospect of weaker job markets in several high-income countries. Additional downside risks include volatile oil prices and currency exchange rates, and a deeper-than-expected economic downturn in high-income countries.”

A special section of the report describes how Diaspora finances can be mobilised for development and strengthening a country's debt position, adding that Diaspora bonds can be structured to directly tap Diaspora savings held in foreign destinations.

“Many countries provide for nonresident deposits to attract Diaspora savings. However, unlike Diaspora bonds, such savings tend to be short-term and volatile. Future inflows of remittances can be used as collateral to lower the costs of international borrowings by developing countries. Due to their large size relative to other sources of foreign exchange, counter-cyclical nature and indirect contribution to public finances, remittances can also help improve a country's sovereign ratings and its ability to repay debt,” the report noted.

It said remittance flows to Latin America and the Caribbean are expected to increase by eight per cent to reach US$156 billion in 2023.

“The strong labour market in the United States positively impacted remittance flows,”the document states, adding that the average cost of sending US$200 to the region was 6.1 percent in the second quarter of 2023.

However it said growth in remittances to the region is expected to slow to 4.4 per cent in 2024.

Global Director of the Social Protection and Jobs Global Practice at the World Bank, Iffath Sharif said “during crises, migrants have weathered risks and shown resilience to support families back home.

“But high inflation and subdued global growth is affecting how much money they can send. Labour markets and social protection policies in host countries should be inclusive of migrants, whose remittances serve as a vital lifeline for developing countries,” he added.

According to the World Bank's Remittances Prices Worldwide Database, remittance costs remain persistently high, costing 6.2 per cent on average to send US$200 as of the second quarter of 2023.

“Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade. They must be leveraged for private capital mobilisation to support development finance.

“Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing.”

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