World Bank forecasts 8pc remittance growth for Bangladesh in 2020

The money received by Bangladesh from migrant workers abroad will grow 8 percent to $20 billion year-on-year in 2020, while remittance flows will shrink 14 globally amid the coronavirus pandemic, the World Bank has said.

The negative impact of the COVID‐19–induced global economic slowdown has been somewhat countered by the diversion of remittances from informal to formal channels in Bangladesh due the difficulty of carrying money by hand under travel restrictions, the global lender said.

Incentives to transfer remittances in Bangladesh are also shifting the transactions from informal to formal channels, according to the latest estimates published in the World Bank’s Migration and Development Brief on Friday.  

The “Haj effect” seems to have affected remittance flows to Bangladesh as well in July 2020.

But perhaps a more important reason for a whopping 53.5 percent year‐on‐year increase in remittance flows in Q3 (July-September) was the damage from the floods that inundated more than one‐quarter of the country’s landmass, affecting nearly 1 million homes and 4.7 million people, according to the report.

In a previous report on migration in April, the World Bank predicted a 20 percent decline in global remittance flows and 22 percent in Bangladesh due to the pandemic. 

“The World Bank’s projections for Bangladesh are always restraint. They have realised that their prediction was wrong,” said Finance Minister AHM Mustafa Kamal. 

“I believe the positive trend of remittance will continue, because we are giving 2 percent incentives and eased rules to fill in forms,” the finance minister told bdnews24.com on Saturday.

He hoped the remittances sent by the Bangladeshi migrant workers will exceed the latest World Bank projection.

They sent home more than $2.15 billion in September, the second highest for a month in Bangladesh’s history. In July, the monthly remittance inflow rose to a record $2.6 billion.

Bangladesh’s foreign exchange reserves crossed $41 billion for the first time two days ago, boosted by the increasing remittances.  

The World Bank said remittance flows to low and middle-income countries are projected to fall by 7 percent to $508 billion in 2020, followed by a further decline of 7.5 percent to $470 billion in 2021.

Remittances to South Asia are projected to decline by around 4 percent in 2020 to $135 billion. In India, remittances are projected to fall by about 9 percent in 2020 to $76 billion.

The foremost factors driving the global decline in remittances include weak economic growth and employment levels in migrant-hosting countries, weak oil prices; and depreciation of the currencies of remittance-source countries against the US dollar, the report said.

This year, for the first time in recent history, the stock of international migrants is likely to decline as new migration has slowed and return migration has increased.

Return migration has been reported in all parts of the world following the lifting of national lockdowns which left many migrant workers stranded in host countries. Rising unemployment in the face of tighter visa restrictions on migrants and refugees is likely to result in a further increase in return migration.

In Bangladesh, the number of emigrants was only 181,218 for January–May 2020 compared to 700,159 for the year 2019, the World Bank said, citing the country’s Bureau of Manpower, Employment and Training.

“Origin countries must find ways of supporting returning migrants in resettling, finding jobs or opening businesses.

“The surge in return migration is likely to prove burdensome for the communities (to which migrants return) as they must provide quarantine facilities in the immediate term and support housing, jobs, and reintegration efforts in the medium term,” the report said.