Growth in remittances from GCC may shift to Africa, Central Asia: IMF

Growth in remittances from the GCC region could shift to Africa and Central Asia, the International Monetary Fund (IMF) said in a report."Governments in the Gulf are starting to recruit fewer foreign workers as part of a push to employ more locals and are diversifying recruitment of foreign workers, targeting those from Africa and Central Asia,” IMF cited the reason in its report titled ‘Resilient remittances’.The report prepared by Dilip Ratha, a lead economist at the World Bank and an adviser to the Multilateral Investment Guarantee Agency noted: "The Gulf Co-operation Council countries are the second-largest source of remittances in US dollar terms but by far the largest when remittances are measured as a share of their GDP. The proportion of foreign workers in the Gulf often exceeds 70% of the population. Saudi Arabia and the United Arab Emirates are large sources of remittances for South Asia, North Africa, and Southeast Asia.”Remittances sent home by migrant workers provide vital income to millions of people in developing economies, the report said.A growing income gap between richer and poorer nations, demographic pressures, and changes to the planet itself will add to the number of people who migrate in search of economic opportunity. This will, in turn, fuel the flow of remittances for decades to come.According to official statistics, global remittances reached a record $647bn in 2022—three times official development assistance. In fact, remittances are worth more than that because many people send money through informal channels not captured by official statistics.Egypt’s remittance receipts are greater than revenue from the Suez Canal; Sri Lanka’s exceed tea exports; Morocco’s are larger than tourism earnings.India is the world’s largest recipient of remittances, the report noted. In 2022, it became the first country to receive more than $100bn in annual remittances. Mexico, China, and the Philippines are also large recipients.For smaller countries or those caught up in conflict, these transfers are especially vital. Money from migrants is worth more than one-fifth of GDP in Tajikistan, Lebanon, Nepal, Honduras, The Gambia, and a dozen other countries."At times of crisis, remittances provide a financial lifeline,” the report noted.Migrant workers usually increase the sums they send home in the aftermath of a natural disaster, say, so that stricken relatives can buy food or pay for shelter. Remittances are often stable even if the source country falls into crisis.During the early stages of Covid-19, in 2020, for instance, remittances fell by just 1.1% — in a year when global income shrank by 3%.Migrant workers played a pivotal role in the economy during the pandemic, both as highly skilled doctors and nurses and as frontline delivery workers. The closure of money transfer operators during lockdowns disrupted remittance services, but people still sent money home through digital channels.Remittances recovered strongly and grew by almost 20% in 2021–22, it said.The United States is the largest source country for remittances, especially for Latin America and the Caribbean, the report said. Stricter border controls have trapped increasing numbers of migrants in transit countries, including in Mexico and Guatemala.A surprise result is an increase in remittance flows to transit countries as stranded migrants receive money from relatives. There’s a similar story on Europe’s borders, with more remittances going to trapped migrants in Morocco, Tunisia, and Turkiye, for example. These flows are having a positive impact on host economies, the report said.