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World Bank sees record 20% slump in remittances due to virus

World Bank sees record 20% slump in remittances due to virus

The US has long been the top source for outflows, with other major countries including the United Arab Emirates, Saudi Arabia, Switzerland, Germany and Russia

Global remittance flows will tumble 20 per cent this year as the coronavirus pandemic drags the economy through a recession, deepening hardship for families in poor and developing nations, according to the World Bank.

Transfers to low- and middle-income countries from workers abroad probably will plunge by a fifth to $445bn, the Washington-based development institution said in a report on Wednesday.

This would mark the sharpest decline in records going back to 1980 and compares with a 5 per cent drop during the 2009 financial crisis.

Europe and Central Asia will take the biggest hits, with remittances expected to drop 28 per cent because of the combined impact from the pandemic and historic meltdown in oil prices.

East Asia and the Pacific will see the smallest decline, at 13 per cent. Latin America’s transfers are projected to fall 19 per cent.

Migrants face risks from loss of employment, wages and health insurance, and because they often congregate in cities, are vulnerable to infection, the World Bank said. The loss of transfers could increase poverty in their home countries.

The recession could be the worst in almost a century, according to the International Monetary Fund, and charity group Oxfam earlier this month estimated a half billion people could be returned to poverty by the pandemic.

While workers typically send more money back home in times of crisis, Covid-19’s universality is poised to upend that model as advanced economies also suffer, the World Bank said.

The US has long been the top source for outflows, with other major countries including the United Arab Emirates, Saudi Arabia, Switzerland, Germany and Russia.

East Asia and the Pacific as a region received the most money in 2019, followed by South Asia. Latin America and the Caribbean, where geographic proximity to the US means transfers are particularly tied to America’s economy, saw the third-most transfers last year.

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