The World Bank has projected that remittances by migrant workers to low and middle income countries (LMICs) will drop to $508 billion in 2020.
In a migration and development report released by the bank, it said the economic crisis induced by COVID- 19 could be long, deep, and pervasive when viewed through a migration lens.
It explained that based on the trajectory of economic activities in large migrant hosting countries, especially the United States, European countries, and the Gulf Cooperation Council countries, remittance flows to low and middle income countries (LMICs) are projected to decline by 7.2 percent, to $508 billion in 2020, followed by a further decline of 7.5 percent, to $470 billion in 2021.
It said the adverse effects of the crisis in terms of loss of jobs and earnings, and exposure to and sickness from COVID 19, has been disproportionately high for migrants, especially for those in informal sectors and lower skilled jobs. Having jobs has not shielded migrant workers from suffering income losses during the crisis.
Another report suggests that migrants, especially those living in dormitories or camps, are particularly vulnerable to the risk of infection from the COVID 19 virus.
The projected declines in remittances are the steepest in recent history, and steeper than the five per cent decline recorded during the 2009 global recession. The foremost factors driving the decline in remittances are weak economic growth and employment situation in migrant hosting countries, a weak oil price, and exchange rates of the currencies of remittance source countries against the US dollar.
This outlook for remittances indicates a more gradual but prolonged decline (continuing into 2021) than our April outlook, which forecast a sharper decline in 2020 followed by a modest recovery in 2021. The outlook for remittances remains uncertain and will depend on the impact of COVID 19 on global growth. This is linked, in turn, to uncertainties regarding the effectiveness of efforts to restrain the spread of the disease.