The World Bank projected remittance flows to Bangladesh would rise in 2023 from the negative growth in 2022, and, currently, remittances are growing at 7 per cent in the country and are expected to reach USD 23 billion in 2023, according to a World Bank report.
The World Bank and the Global Knowledge Partnership on Migration and Development (KNOMAD) revealed the data in the “Leveraging Diaspora Finances for Private Capital Mobilization: Migration and Development Brief 39” released on Monday.
The top-six recipient counties for remittances in 2023 are expected to be India, with an estimated total of USD 125 billion in the year, followed by Mexico (USD 67 billion), then China (USD 50 billion), the Philippines (USD 40 billion), and Egypt and Pakistan (USD 24 billion each).
According to the report, like Bangladesh, remittance inflow grew in Sri Lanka this year after macroeconomic stability is being restored and migrants seem to be responding positively with an escalation in remittances, as the impact of an IMF-supported programme took effect.
Surge in labour markets in the United States and Europe, as well as a dampening of inflation in high-income countries will contribute to rise in remittance flows to Bangladesh.
However, a near collapse in growth in Saudi Arabia and Kuwait will impact negatively on remittance flows to Bangladesh, according to the report.
According to data from Bangladesh Bank, inflow of remittance rose by 21 per cent year-on-year to USD 1.93 billion in November 2023.
Bangladesh received USD 19.92 billion in remittances in January-November this year, which is still 3.07 billion less than the World Bank projection of 23 billion in 2023.
Remittance through legal channels increased in July-November of the 2023-24 fiscal due to additional incentives.
Position by countries
According to World Bank-KNOMAD, global remittance flows are estimated at USD 860 billion in 2023 – an increase of 3 per cent from 2022.
The top-six recipient counties for remittances in 2023 are expected to be India, with an estimated total of USD 125 billion in the year, followed by Mexico (USD 67 billion), then China (USD 50 billion), the Philippines (USD 40 billion), and Egypt and Pakistan (USD 24 billion each).
Bangladesh is projected to be the seventh highest recipient of remittance, with estimated total of USD 23 billion, followed by Nigeria (USD 21 billion), Guatemala (USD 20 billion) and Uzbekistan (USD 16 billion), the report said.
At 27 per cent, Nepal continued to have the highest share of remittances relative to gross domestic product (GDP) in South Asia. In comparison, remittances as a share of GDP ranged around 7 per cent in Sri Lanka and Pakistan, and 5.2 per cent in Bangladesh in 2023.
In India, the share of remittances in the economy was only 3.4 per cent, despite its position as the largest recipient of remittances globally.
The report stated growth in formal remittances to Bangladesh is projected to remain flat on account of the lingering impacts of the recent balance of payment crisis that triggered exchange controls and led to parallel market exchange rate premia.
Depreciation and exchange rate management policies have led migrants in Bangladesh, Pakistan, and Sri Lanka to take advantage of the black-market premia and transfer funds through informal and formal channels, it added.
The growth of remittances in 2023 was particularly high in Latin America and the Caribbean (8 per cent) and in South Asia (7.2 per cent). On the other hand, remittance flow to high-income countries did not grow after 2021.
In addition, while the growth outlook in the GCC countries is positive, new job creation for South Asian migrants in 2024 is expected to be constrained by low oil prices. Remittance flows to Bangladesh are projected to remain at $23 billion in 2024.
Recovering after two years of a continuous and steep decline, remittance flows to Sri Lanka are expected to continue to increase to $6 billion in 2024.
Sources of remittance
The United States has continued to be the largest source of remittances, followed by Saudi Arabia. Top remittance source countries also include several countries of the Gulf Cooperation Council (GCC).
Remittance flow to low- and middle-income countries (LMICs) are estimated to reach $669 billion in 2023. The growth in remittances is estimated to fall to 3.8 per cent in 2023, following a 7.7 per cent gain in 2022.
The growth of remittances in 2023 was particularly high in Latin America and the Caribbean (8 per cent) and in South Asia (7.2 per cent). On the other hand, remittance flow to high-income countries did not grow after 2021.