Global remittances likely to sustain rebound

The Asian Development Bank predicts that remittances sent home by migrants will continue to rise in 2022 as economies recover from the pandemic.

The Asian Development Bank (ADB) said in a report titled "Labor Mobility and Remittances in Asia and the Pacific (APAC) during and after the coronavirus disease 2019 (COVID-19) pandemic" that remittance inflows to the region are expected to account for 63.4 percent of global remittance growth this year and in 2022.

Global remittances are expected to rise by 4.8 percent, or $34 billion, this year, and by 4.2 percent, or $31 billion, in 2022, according to the ADB. Remittance inflows to the APAC region will increase by 6.7 percent, or $21.2 billion, this year, and by 5.9 percent, or $19.8 billion, in 2022.

The higher 2021 remittance growth estimate reflects the base effect as well as "migrant workers' desire to remit and possibly make up for foregone remittances in 2020," according to the ADB.

"Most advanced economies, which are the primary recipients of remittances, have already recovered more strongly from COVID-19 than migrant-sending economies, which are still severely impacted by the ongoing COVID-19 resurgence caused by the Delta variant." This wider economic divergence, in turn, could provide a stronger stimulus for remittance inflows from advanced economies to developing economies," according to the ADB.

Slower growth in remittance inflows in 2022 may indicate that the global economy is improving as base effects fade.

Remittances to Southeast Asia are expected to grow by 4%, or $3 billion, in 2021, and by 5.9%, or $4.6 billion, the following year.

"The expected robust recovery in remittances in the near term can be largely linked to higher remittance receipts from migrants in more advanced economies such as the United Kingdom (UK), the United States (US), the European Union (EU), and the Middle East," the ADB said.

According to the ADB, APAC remittance growth could even outpace Asia's projected economic growth rates during the same period.

"These findings reflect the region's higher COVID-19-related risks - higher COVID-19 cases and lower vaccination rates - which prompt a stronger altruistic response among migrant communities abroad," the study said.

The Philippine central bank anticipates a 6% increase in cash remittances this year and a 4% increase in 2022.

Despite the improvement in remittance inflows, the ADB stated that migrant workers continue to require assistance because many destination countries maintain strict immigration and health protocols.

"Even if domestic outbreaks in many host economies are contained, it will likely take time before borders reopen fully to foreign workers." Effective policy support and incentives to assist the migrant and remittance sectors in recovering can make a significant difference," according to the ADB.

According to the ADB, both the home and destination economies must provide social protection for migrants and their families through employment-related assistance, health services, and social assistance.

"Some recipient households remain at risk of falling into poverty, necessitating long-term support, particularly for those with limited access to employment, such as older people, single parents, and people with disabilities," the ADB stated.

The multilateral lender also emphasized that migrants must have access to COVID-19 vaccines.

Cash remittances sent by overseas Filipino workers stimulate household consumption, which accounts for 70% of the Philippine economy.