One of the biggest sources of cash for the world’s poorest countries shrank for a second year in a row
Foreign aid is nothing compared to the kindness of family. Every year, the biggest transfer of funds from the rich world to developing countries comes in the form of remittances—transfers from foreign workers back to friends and relatives in their home country.
In 2016, the World Bank estimates that $575 billion in remittances were sent globally. The $429 billion in remittance payments received by developing countries last year was triple the amount of foreign aid disbursed by rich countries.
It’s worrying, then, that it looks like remittances are on the decline. For the first time in three decades, annual global remittances have fallen for two years in a row—these transfers were $22 billion less last year than they were in 2014.
The downturn is probably a blip. The World Bank expects remittances to rise in the coming years, as the global economy improves. They estimate payments will reach a record $615 billion in 2018, with $460 billion going to developing countries.
The primary culprits for the recent drop are low oil prices and slow economic growth in the Gulf states and Russia—the sources of almost 20% of all remittances. Most of the foreign workers in these countries are from South and Central Asia, the regions hit hardest by the remittance slowdown. Read more…