The rate of global remittance is set to decline sharply thanks to the harsh COVID economy. This could have dire consequences for the world’s poorest communities.
Looking at the worldwide coronavirus statistics, it’s easy to see the virus as a western issue. Deaths and rates of infection are, if the stats are to be believed, overwhelmingly higher in western nations. Whilst the UK stands at nearly 250,000 cases and over 34,000 deaths as I write this, and the US houses over 1.5 million infected and nearly 100,000 dead, Ethiopia and the Congo have less than 400 cases each, whilst Zimbabwe and Malawi are both reporting under 100 people infected (according to the worldometer).
Given the lack of infrastructure and personnel required to handle a pandemic situation in many eastern emerging markets, numbers in these countries coming anywhere close to Europe’s would cause untold devastation. The fact that we’ve (so far) evaded the worst in Africa, The Middle East, and Southeast Asia is one of the only consolations of the COVID-19 tragedy. However, the impact of the virus is starting to be felt there in other ways, as the western economy weighs heavily on all corners of the globe.
Due to the mass unemployment and job insecurity currently sweeping the western hemisphere, The World Bank has issued a prediction that global remittances, or the money sent home from people working abroad, will fall by around 20% in 2020. As the economy grinds to a halt, migrants, who are significantly over-represented in the gig economy, are losing wages and access to remittance services. For many of these migrants, the promise of being able to financially support their families back home was an incentive to move to the west, and their families have come to rely heavily on these supplements to live.
‘Migrant remittances provide an economic lifeline to poor households in many countries,’ reads the report. ‘A reduction in remittance flows could increase poverty and reduce households’ access to much-needed health services.’
Last year, around $554 billion USD in remittance flow was received by low-and-middle-income countries (LMICs). This is actually a larger amount than all the official foreign investment in these nations combined, making remittance a significant part of the global economy. Now, as shops and work-sites close around the world, freezing the wages of many who use remittance services, this cash flow is set to drop to around $445 billion USD.
All recipient regions will be affected, with the World Bank highlighting Europe and Central Asia, Sub-Saharan Africa, and South Asia as regions which will see a fall of more than 20%.