World Bank predicts 7.3% fall in remittances

The World Bank has predicted a 7.3 per cent decline in remittance flows to developing nations in 2009 to $304 billion.

The slowdown in global remittance flows that became evident in the last quarter of 2008 has continued in the first half of 2009. However, South Asian countries like India, Pakistan and Bangladesh have continued to post strong growth till now because of remittances from the Gulf region.

"Remittances provide a lifeline to many poor countries. Although they remain resilient, even a small decline of 7 or 10 per cent can pose significant hardships to the people and to governments, especially those facing external financing gaps.

Reducing remittance fees and developing innovative tools to leverage remittances for financial inclusion and capital market access should be a part of our response to the financial crisis," said Dilip Ratha, lead economist, Development Prospects Group of the World Bank.

India received the highest of 15 per cent of the total global remittance inflows at $52 billion in 2008, which constituted 3.3 per cent of its gross domestic product. Remittance flows to developing countries reached $328 billion in 2008, an increase of 15 per cent over 2007.

The new forecasts show significant decline in remittance flows to Latin America and Caribbean region and Sub-Saharan Africa with a decline of 7 and 8 per cent, respectively, in 2009.

However, according to the World Bank report, the decline in remittances is far smaller than that for private flows to developing countries.