Migration and Development Brief

Dilip Ratha, Sanket Mohapatra

Thematic Working Groups
Data and Demographics
Remittances and Diaspora Resources
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
North America
South Asia
The World Region

Revised forecasts for remittance flows to developing countries in the light of a downward revision to the World Bank’s global economic outlook suggest a sharper decline of 5‐8 percent in 2009 compared to our earlier projections. This decline in nominal dollar terms is small relative to the projected fall in private capital flows or official aid to developing countries. However, considering that remittances registered double‐digit annual growth in the past few years, an outright fall in the level of remittance flows as projected now will cause hardships in many poor countries. South‐South remittances from Russia, South Africa, Malaysia and India are especially vulnerable to the rolling economic crisis. Also the outlook remains uncertain for remittance flows from the GCC countries. Both low‐income and middle‐ income countries are expected to see a similar decline – about 5 percent – in remittance inflows in 2009. The persistence of the migrant stock will contribute to the persistence (or resilience) of remittance flows in the face of the crisis. Sources of risk to this outlook include uncertainty about the depth and duration of the current crisis, unpredictable movements in exchange rates, and political reaction to weak job markets in destination countries which could lead to more tightening of immigration controls. Even with these risks, in many developing countries remittances will become even more important as a source of external financing as private flows dry up.