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Mapped: The Ins and Outs of Remittance Flows
[size=1.1]The global immigrant population is growing at a robust pace, and their aggregate force is one to be reckoned with. In 2019, migrants collectively sent $550.5 billion in money back to their home countries—money transfer flows that are also known as remittances.
[size=1.1]Remittances serve as an economic lifeline around the world, particularly for low- and middle-income countries (LMICs). Today’s visualization relies on the latest data from the World Bank to create a snapshot of these global remittance flows.
[size=1.1]Where do most of these remittances come from, and which countries are the biggest recipients?
Remittances: An Origin Story[size=1.1]Remittances are a type of capital flow, with significant impacts on the places they wind up. These money transfers have surpassed official aid being sent to LMICs for decades, and in this day and age, are rivaling even Foreign Direct Investment (FDI) flows.
[size=1.1]Remittance flows mainly help improve basic living standards such as housing, healthcare, and education, with leftover funds going towards other parts of the economy. They can also be a means for increasing the social mobility of family and friends back home.
[size=1.1]Altogether, 50% of remittances are sent in either U.S. dollars, or the closely-linked currencies of Gulf Cooperation Council (GCC) countries, such as the Saudi riyal. It’s not surprising then, that the U.S. is the biggest origin country of remittances, contributing $68.5 billion in 2018—more than double that of the next-highest country, Saudi Arabia, at $33.6 billion.
Remittance Flows As A Safety Net[size=1.1]The impact of remittances on LMICs can vary depending on what you measure. In absolute terms, the top 10 LMIC recipients received $350 billion, or nearly 64% of total remittances in 2019.
[size=1.1]Top Remittance Recipients in 2019 (USD)
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[size=1.1]India tops the chart as the largest remittances beneficiary, followed by China and Mexico. Interestingly, these three countries are also the main destinations of remittance flows from the U.S., but in the reverse order. Mexico and the U.S. have one of the most interconnected remittance corridors in the world.
[size=1.1]However, the chart above makes it clear that simply counting the dollars is only one part of the picture. Despite these multi-billion dollar numbers, remittances are equal to only a fraction of these economies.
[size=1.1]By looking at remittances as a percentage of nominal GDP, it’s clear that they can have an outsize impact on nations, even if the overall value of flows are much lower in comparison.
[size=1.1]Top Remittance Recipients in 2019 (% of GDP)
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[size=1.1]It’s clear that the cash influxes provided by remittances are crucial to many smaller countries. Take the Polynesian archipelago of Tonga, for example: even though it only saw $190 million in remittances from abroad, that amount accounts for nearly 40% of the country’s nominal GDP.
Will The Remittance Tides Turn?[size=1.1]The World Bank projects remittance flows to increase to nearly $600 billion by 2021. But are such projections of future remittance flows reliable? The researchers offer two reasons why remittances may ebb and flow.
[size=1.1]On one hand, anti-immigration sentiment across major economies could complicate this growth, as evidenced by Brexit. The good news? That doesn’t stop immigration itself from taking place. Instead, where these migrants and their money end up, are constantly in flux.
[size=1.1]This means that as immigration steadily grows, so will remittance flows. What’s more, fintech innovations have the potential to bolster this progress, by making money transfers cheaper and easier to access.
[size=1.5em]Tackling [high transaction costs] is crucial not only for economic and social development, but also for improving financial inclusion.
[size=1.5em]—UN ESCAP, Oct 2019
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