Outlook for Remittance Flows 2012-14

Nepal has ranked 6th among all countries across the globe that receive more remittances as a share of gross domestic product in 2011, says a report released on 1st December 2011 of the World Bank on Migration and Development.

The Outlook for Remittance Flows 2012-14 estimates that Nepal will receive around US$ 400 million worth of remittances from its overseas workers in 2011, making remittances stand at 20 percent of country´s total GDP. 

“Tajikistan, Lesotho, Samoa, Moldova and Kyrgyz Republic are the top five countries receiving more remittances as a share of GDP, and Nepal stands at the 6th place,” says the report. Remittances received by these top five countries were equal to 31 percent, 29 percent, 25 percent, 23 percent and 21 percent of their respective GDPs.

The new estimates show that the top recipients of remittances among developing countries in 2011 are India (US$58 billion), followed by China (US$57 billion), Mexico (US$ 24 billion) and the Philippines (US$ 23 billion). Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon are other large recipients in terms of US dollar.

The report estimates that remittance flows to developing countries in 2011 could have touched US$ 351 billion. This is 8 percent growth over what those countries received in 2010 and well above the growth forecast of 7.3 percent that the WB had made earlier.

When flows to high-income countries are included, the global remittance flows could touch US$406 billion this year.

“And this is the first time since the global financial crisis that remittance flows to all developing regions have increased in 2011”, reads the report. 

The report attributes the rise in remittance flows to countries like Nepal to high oil prices, something which enabled Gulf countries to hire more workers and pay them better than the past few years. The depreciation of local currency, which enabled families back home enjoy net exchange rate gains, also contributed in the flow of remittances in countries like Nepal.

Such finding of the WB matches with the figures that the Nepal Rastra Bank (NRB) released recently. The latest macro-economic report that NRB made public on Wednesday says Nepal received some Rs 75 billion worth of remittances over the first quarter of this fiscal year, which is about 28 percent rise over remittances received in the same period last year.

The report further adds that even though remittances to developing countries grew in 2011, they are vulnerable to the uncertain economic prospects in the migrant destination countries. Following this rebound, the WB predicts that the remittance flows to developing countries could continue in a range of 7-8 percent per annum and reach US$441 billion by 2014.

The remittances are expected to increase 8.0 percent to $351 billion in 2011, 7.3 percent to $377 billion in 2012, 7.9 percent to $406 billion in 2013, and 8.4 percent to $441 billion in 2014.

Global remittance flows, including those to high-income countries, are expected to exceed $515 billion by 2014.

Remittances to the developing economies in East Asia and the Pacific are projected to rise 7.6 percent to $101 billion in 2011 and 7.3 percent to $109 billion in 2012. They are forecast to increase by another 8.0 percent to $117 billion in 2013 and 8.7 percent to $127 billion by 2014.

The World Bank report says that high oil prices, which have hovered over $100 a barrel in recent months, continue to provide a much-needed cushion for migrant employment in, and remittance flows from, the Gulf Cooperation Countries (GCC) and Russia. Oil driven economic activities and increased spending on infrastructure development are making these countries attractive for migrants from developing countries.

The report acknowledges that the remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, it pinpoints that the cost is still too high, especially in Africa and other small nations where remittances provide a lifeline to the poor.

Following such finding, the WB has pressed the countries across the globe to improve the data on remittances at the national and bilateral levels.