World Bank says remittances slowed in the Caribbean in 2023

WASHINGTON, CMC – The World Bank says that after a period of strong growth during 2021-2022, officially recorded remittance flows to low- and middle-income countries (LMICs), such as those in the Caribbean, moderated in 2023, reaching an estimated US$656 billion.

According to the World Bank's latest Migration and Development Brief, released on Wednesday, the modest 0.7 per cent growth rate reflects large variances in regional growth

But is says that remittances remained a crucial source of external finance for developing countries, including the Caribbean, in 2023, bolstering the current accounts of several countries grappling with food insecurity and debt issues.

The brief says that, in 2023, remittances surpassed foreign direct investment and official development assistance.

Looking ahead, the report says remittances to LMICs are expected to grow at a faster rate of 2.3 per cent in 2024, although this growth will be uneven across regions.

The brief says potential downside risks to these projections include weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.

“Migration and resulting remittances are essential drivers of economic and human development,” said Iffath Sharif, global director of the Social Protection and Jobs Global Practice at the World Bank. “Many countries are interested in managed migration in the face of global demographic imbalances and labour deficits on the one hand, and high levels of unemployment and skill gaps on the other.

“We are working on partnerships between countries sending and receiving migrants to facilitate training, especially for youth, to get the skills needed for better jobs and income at home and in destination countries,” he added.

The report says that, in 2023, remittance flows increased most to Latin America and the Caribbean (7.7 per cent), followed by South Asia (5.2 per cent), and East Asia and Pacific (4.8 per cent, excluding China).

Sub-Saharan Africa saw a slight decline of 0.3 per cent, while the Middle East and North Africa experienced a nearly 15 per cent drop, and Europe and Central Asia saw a 10.3 per cent fall, the brief says.

“The resilience of remittances underscores their importance for millions of people,” said Dilip Ratha, lead economist and lead author of the report. “Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries. The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector.”

The report says sending remittances remains too costly. In the fourth quarter of 2023, it says the global average cost of sending US$200 was 6.4 per cent of the amount being sent, slightly up from 6.2 per cent a year earlier and well above the SDG target of 3 per cent.

Digital remittances had a lower cost of 5 per cent, compared with 7 per cent for non-digital methods, highlighting the benefits of technological advancements in reducing the financial burden on migrants, the report says.

With remittances growing in importance, it says accurate data collection is essential to support the UN Sustainable Development Goals on reducing costs and increasing volume.

However, the report says statistical data remain “inconsistent and incomplete.”

The report says the global gap between inward and outward remittance flows has widened, with informal channels being a major factor, such as migrants carrying cash by hand when they return home.

The International Working Group to Improve Data on Remittance Flows (RemitStat) will release a report later this year with recommendations for improving data, the report says.

In Latin America and the Caribbean, the Migration and Development Brief says remittance growth slowed to 7.7 per cent in 2023, reaching US$156 billion, supported by a strong US labour market.

The report says Mexico received US$66.2 billion, a 7.8 per cent increase, maintaining its position as the top recipient in the region. It added that  growth varied widely, from a 44.5 per cent increase in Nicaragua to a 13.4 per cent decline in Argentina.

It says flows are expected to grow by 2.7 per cent in 2024, and that the cost of sending US$200 averaged 5.9 per cent, largely unchanged from the previous year.

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