RECOVERY COVID-19 Crisis Through a Migration Lens Migration and Development Brief 35 November 2021 Migration and Development Brief reports an update on migra- tion and remittance flows as well as salient policy developments in the area of international migration and development. The Global Knowledge Partnership on Migration and Development (KNOMAD) is a global hub of knowledge and policy expertise on mi- gration and development. It aims to create and synthesize multidisci- plinary knowledge and evidence; generate a menu of policy options for migration policy makers; and provide technical assistance and capacity building for pilot projects, evaluation of policies, and data collection. KNOMAD is supported by a multi-donor trust fund established by the World Bank. 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Ratha, Eung Ju Kim, Sonia Plaza, Ganesh Seshan, Elliott J Riordan, and Vandana Chandra. iv RECOVERY — COVID-19 Crisis Through a Migration Len s Contents Summary .............................................................................................................6 Acknowledgements.............................................................................................9 1. Robust Remittance Flows in 2021..................................................................11 1.1 A Resurgence in Flows ......................................................................................... 11 1.2 Reasons for Recovery .......................................................................................... 15 1.3 Top Remittance Source and Recipient Countries................................................ 18 1.4 Outlook for 2022: Downside Risks....................................................................... 19 2. Migration Trends............................................................................................ 23 3. Policy Issues.................................................................................................... 27 3.1 Remittance Costs (SDG indicator 10.c.1)............................................................ 28 3.2 Digital Remittances and De-risking..................................................................... 29 4. Regional Trends in Migration and Remittance Flows.................................... 33 4.1 Remittances to East Asia and the Pacific Declined in 2021 ................................ 33 4.2 Remittances to Europe and Central Asia to Rebound in 2021 ........................... 36 4.3 Remittances to Latin America and the Caribbean Surged in 2021.................... 41 4.4 Remittances to the Middle East and North Africa Lifted by EU Rebound and Oil Prices.................................................................................. 48 4.5 Remittances to South Asia Advanced in 2021..................................................... 52 4.6 Remittances to Sub-Saharan Africa Regain Momentum.................................... 58 References ......................................................................................................... 63 1 Migration and Development Brief 35 List of Figures Figure 1.1a Remittances, Foreign Direct Investment, and Official Development Assistance Flows to Low- and Middle-Income Countries, 1990–2022 ............................................................... 12 Figure 1.1b Remittances, Foreign Direct Investment, and Official Development Assistance Flows to Low-and Middle-Income Countries, Excluding China, 1990–2022 ................................... 12 Figure 1.2 Remittance Flows by LMIC Region, 2020–21.................................................................... 13 Figure B1.1.1 Regional growth rates of remittances (high-frequency data).................................... 14 Figure 1.3 Employment Levels of Hispanic, Foreign Born, and Native Born in the United States...................................................................................................................................... 15 Figure 1.4 Top Recipients among Low- and Middle-Income Countries............................................ 18 Figure 1.5 Daily New Confirmed COVID-19 Cases (rolling seven-day average)............................. 19 Figure 1.6 Changes in Industrial Production and Oil Prices .............................................................. 20 Figure 2.1 The Number of Foreign Workers in Saudi Arabia Continues to Decrease..................... 24 Figure 3.1 How Much Does It Cost to Send $200? Regional Remittance Costs, 2020–21............... 29 Figure 4.1 Resource Flows to East Asia and Pacific (excluding China), 1990–2022........................ 33 Figure 4.2 Top Remittance Recipients in the East Asia and Pacific Region, 2021 ........................... 34 Figure 4.3 Remittance Fees to the Philippines Are Among the Lowest in the East Asia and Pacific Region ............................................................................................................................. 35 Figure 4.4 Resource Flows to Europe and Central Asia, 1990–2022................................................. 37 Figure 4.5 Higher Oil Prices Boosted Outward Remittances from Russia in 2021 ........................... 38 Figure 4.6 Top Remittance Recipients in Europe and Central Asia, 2021......................................... 39 Figure 4.7 Outward Remittances from Russia to Central Asian Countries Bounced Back in 2021 ....................................................................................................................................... 39 Figure 4.8 Outward Remittances from Kazakhstan Remained Strong in 2021 ................................ 40 Figure 4.9 Russia Remained the Least Expensive Country from Which to Send Money................... 41 Figure 4.10 Remittances, Foreign Direct Investment, and Official Development Assistance Flows to Latin America and the Caribbean, 1990–2022 .................................................................. 42 2 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.11 Top Remittance Recipients in Latin America and the Caribbean, 2021........................ 43 Figure 4.12 Remittance Flows to Latin America and the Caribbean Continue Strong ..................... 43 Figure 4.13 Cost of Sending Money to Latin America and the Caribbean Remained Stable.......... 46 Figure 4.14 Border Patrol Southwest Border Apprehensions/Inadmissibles, FY15–21 ................... 47 Figure 4.15 Remittances Provide a Financial Lifeline in the Middle East and North Africa Region ........................................................................................................................... 48 Figure 4.16 Top Remittance Recipients in the Middle East and North Africa, 2021 ........................ 49 Figure 4.17 Sending Money within the Middle East and North Africa Is Less Expensive than Sending Money from Outside.................................................................................................... 51 Figure 4.18 Resource Flows to South Asia, 1990–2022 ..................................................................... 52 Figure 4.19 Top Remittance Recipients in South Asia, 2021 ............................................................. 53 Figure 4.20 Oil Prices Have Affected Remittance Flows to India....................................................... 54 Figure 4.21 The Costs of Sending Remittances to South Asia Varied Widely across Corridors ...... 56 Figure 4.22 Resource Flows to Sub-Saharan Africa, 1990–2022...................................................... 58 Figure 4.23 Top Remittance Recipients in Sub-Saharan Africa, 2021.............................................. 59 Figure 4.24 The Costs of Sending Remittances to Sub-Saharan African Countries Varied Widely across Corridors ..................................................................................................................... 60 Figure 4.25 Quarterly Remittance Inflows, Nigeria .......................................................................... 61 List of Tables Table 1.1 Estimates and Projections of Remittance Flows to Low- and Middle- Income Regions................................................................................................................................... 11 Table 2.1 Year-on-Year Change in the Number of Expatriate Workers............................................. 24 Table 3.1 Government Policy Responses during the Crisis.................................................................. 27 3 Migration and Development Brief 35 List of Boxes Box 1.1 High-Frequency (Quarterly) Data Exhibit a Short-Lived Decline in Remittance Flows in Q2 2020 and Recovery Starting Q3 2020.................................................................... 14 Box 1.2 Digital Nomads and Remittances................................................................................ 17 Box 3.1 Call to Action: Keep Remittances Flowing.................................................................... 28 Box 4.1 Could the Surge in Remittances to Mexico Be Explained by an Increase in Transit Migration?....................................................................................................................... 45 Box 4.2 Afghanistan Crisis Boosted Remittance Inflows to Pakistan........................................ 55 4 RECOVERY — COVID-19 Crisis Through a Migration Len s 5 Migration and Development Brief 35 Summary This Migration and Development Brief provides in the number of transit migrants stranded in updates on global trends in migration and Mexico and Central American countries. remittances. It highlights developments related to migration-related Sustainable Development In all developing regions of the world, migrants Goal (SDG) indicators for which the World stepped up their support to families back home, Bank is a custodian: increasing the volume of especially to countries affected by the spread remittances as a percentage of gross domestic of the COVID-19 Delta variant. Their ability product (SDG indicator 17.3.2) and reducing to help was enabled by a welcome pickup in remittance costs (SDG indicator 10.c.1). economic activity and employment in major migrant destination countries, grounded partly In 2021, remittance flows to low- and middle-in- in the exceptional COVID-19 emergency fiscal come countries (LMICs) are projected to reach stimuli and accommodative monetary policies. $589 billion, registering a 7.3 percent increase. The recovery in 2021 follows the resilience of Growth in remittance flows has been exception- flows seen in 2020, when remittances recorded ally strong (21.6 percent) in Latin America and only a modest 1.7 percent decline to $549 the Caribbean. Although timely data are not yet billion, in the face of one of the deepest record- available, an increase in the number of transit ed global recessions. Remittances now stand migrants (and in the remittances they receive to more than threefold above official development support themselves and to finance smuggling assistance and, excluding China, more than 50 fees) is a significant factor behind the exception- percent higher than foreign direct investment. ally strong increase in remittance inflows to the This underscores the importance of remittance region, especially to Mexico (which registered 25 flows in smoothing consumption in recipient percent growth during the first nine months of countries during periods of economic hardship. 2021 compared to the same period of 2020) as well as to Guatemala, the Dominican Republic, The international migrant stock seems to have and El Salvador (which registered more than 30 declined for a second consecutive year, with percent growth during the first nine months of weak new migration flows and large return 2021 compared to the same period of the previ- migration in 2020 and 2021. The number ous year). In addition, the economic recovery in of foreign workers in the Gulf Cooperation the United States, and the strong increase in av- Council (GCC) region, which is among the erage weekly earnings for all employees (about top destinations for migrants and top sources 9.5 percent from March 2020 to September of remittances, continued to decline in 2021. 2021), also contributed to the increase in remit- Deployment of workers from Pakistan to the tances to Latin America and the Caribbean. GCC region fell by over 64 percent during 2020 and again by another 11 percent during the In most other regions, remittances have also first nine months of 2021, and in Bangladesh recovered strongly, registering growth of 5 to it fell by 19 percent in the first three months of 10 percent in Europe and Central Asia, the 2021 compared to the same period of 2020. Middle East and North Africa, South Asia, and Migrants attempts to enter the United States Sub-Saharan Africa, but a slower pace of 1.4 through its southern border increased signifi- percent in East Asia and the Pacific (exclud- cantly in 2021. However, there was an increase ing China). The key contributing factors are 6 RECOVERY — COVID-19 Crisis Through a Migration Len s migrants’ willingness to support families in times continue indefinitely. Moreover, the shift from of need, together with the fiscal stimulus and cash to digital remittance channels which was employment support programs implemented observed at the peak of the COVID-19 crisis in in the United States and European destination 2020, has likely run its course. Further growth countries which provided many migrants with the will require greater progress in access to bank financial wherewithal to send increased support accounts (which is essential for using digital to their families back home. In the GCC countries channels) for migrant populations. This process and Russia, the recovery of outward remittances is hindered by anti-money laundering and was also facilitated by stronger oil prices and countering the financing of terrorism (AML/ the resulting pickup in economic activity. CFT) regulations, which remain stringent, e.g., not facilitating e-KYC onboarding. In some In 2021, the top five remittance recipients in corridors, such as Cuba and Afghanistan, such current US dollar terms were India, China, regulations have become even more strict. Mexico, the Philippines, and the Arab Republic of Egypt. As a share of gross domestic prod- SDG indicator 10.7.1 monitors global efforts uct, the top five remittance recipients in 2021 to reduce migrant recruitment costs. Migrants were smaller economies: Tonga, Lebanon, the continue to pay exorbitant amounts to get jobs Kyrgyz Republic, Tajikistan, and Honduras. The abroad. Newly released data covering the 2019– United States was the largest source country 20 pre-pandemic period shows that Bangladeshi for remittances in 2020, followed by the United workers in Saudi Arabia paid the equivalent Arab Emirates, Saudi Arabia, and Switzerland. of 20 months of their foreign earnings (around $5,000), while Vietnamese workers heading to The cost of sending money across international the Republic of Korea incurred costs close to 9 borders remained high, around 6.4 percent months of their salary abroad (over $9,200). on average in the first quarter of 2021, or more than double the SDG target of 3 per- Policy makers should continue their efforts to cent (figure 3.1). The cost of remittances to keep remittances flowing by lowering the cost Sub-Saharan Africa remained particularly of remittances, increasing access to bank- high (8 percent). Corridor-specific data reveal ing for migrants and for remittance service that remittance costs tend to be higher when providers, and making policy responses to remittances are sent through banks than the COVID-19 crisis (in terms of access to through digital channels or through money vaccines, healthcare, housing, and education) transmitters offering cash-to-cash services. inclusive of migrants. Migrants may also need protection against overwork or underpay- Remittances are expected to continue growing ment by employers during the crisis. Finally, in 2022, but there are downside risks. The many migrant origin communities are facing COVID-19 crisis is far from over and poses the unexpectedly large return of migrants and most important downside risk to the outlook for they may need support to provide healthcare, global growth, employment, and remittance quarantine facilities and other social services. flows to LMICs. The fiscal stimulus programs in major migrant destination countries cannot 7 Migration and Development Brief 35 8 RECOVERY — COVID-19 Crisis Through a Migration Len s Acknowledgements This brief was prepared by Dilip Ratha, the Poverty Global Practice. Thanks to the Vandana Chandra, Eung Ju Kim, Kebba peer reviewers Elena Ianchovichina, Harish Jammeh, Elliot Riordan, and Maja Vezmar Natarajan, and Siddharth Sharma for of the Migration and Remittances Unit of helpful comments and to Michal Rutkowski the Jobs Group in the Social Protection and and Ian Walker for support and guidance. Jobs Global Practice; Sonia Plaza of the Thanks to Rebecca Ong for communications Finance, Competitiveness, and Innovation support and Fayre Makeig for editing. Global Practice; and Ganesh Seshan of 9 Migration and Development Brief 35 10 RECOVERY — COVID-19 Crisis Through a Migration Len s 1. Robust Remittance Flows in 2021 1.1 A Resurgence in Flows second half of 2020 and continuing into 2021 (box 1.1). Even as foreign direct investment In 2021 remittance flows to low-and middle-in- (FDI) flows seem to be recovering in 2021, come countries (LMICs) are projected to reach remittance flows to LMICs (excluding China) $589 billion, registering a 7.3 percent increase, are on track to surpass the sum of FDI and the strongest growth performance since 2018 official development assistance (ODA) flows (figure 1.1a and table 1.1). The recovery in (figure 1.1b). Remittances now stand more 2021 follows the resilience of flows seen in than threefold above ODA levels and more 2020, when remittances recorded a modest than 50 percent higher than FDI. This under- 1.7 percent decline to $549 billion.1 A sharp scores the importance of remittance flows in decline in remittances in the second quarter smoothing consumption in origin countries (Q2) of 2020, in the immediate aftermath of during periods of economic hardship.2 widespread lockdowns and travel bans, was followed by a recovery in flows through the Table 1.1 Estimates and Projections of Remittance Flows to Low- and Middle-Income Regions $ billion 2009 2015 2016 2017 2018 2019 2020e 2021f 2022f Low and Middle Income 303 453 447 485 532 559 549 589 605 East Asia and Pacific 80 128 128 134 143 148 136 131 131 excluding China 39 64 67 70 76 79 77 78 81 Europe and Central Asia 34 48 49 59 66 70 64 67 70 Latin America and the Caribbean 55 69 74 82 90 97 103 126 131 Middle-East and North Africa 31 50 49 52 53 55 56 62 64 South Asia 75 118 111 117 132 140 147 159 162 Sub-Saharan Africa 28 41 37 42 49 49 42 45 48 World 433 602 597 640 695 722 706 751 774 (Growth rate, percent) Low and Middle Income -5.1 0.5 -1.2 8.4 9.7 5.0 -1.7 7.3 2.6 East Asia and Pacific -4.8 3.7 -0.5 5.1 6.8 3.2 -7.8 -4.0 -0.3 excluding China 5.8 4.8 3.5 5.4 8.0 4.8 -3.3 1.4 3.3 Europe and Central Asia -13.5 -13.3 3.0 19.8 12.2 5.9 -8.6 5.3 3.8 Latin America and the Caribbean -12.3 6.6 7.2 11.2 9.8 8.3 6.2 21.6 4.4 Middle-East and North Africa -6.0 -6.4 -1.2 5.3 2.3 3.9 2.8 9.7 3.6 South Asia 4.5 1.6 -5.9 6.0 12.3 6.1 5.2 8.0 1.8 Sub-Saharan Africa -2.1 6.3 -8.4 10.9 17.4 1.1 -14.1 6.2 5.5 World -5.0 -1.3 -0.8 7.2 8.5 3.9 -2.3 6.5 3.1 Memo items: Remittances to LMICs according to country classification of different years 2001 country classification 316 469 465 504 551 579 567 605 621 2011 country classification 306 456 450 488 535 562 552 592 607 2020 country classification 302 447 441 478 525 550 541 581 596 Source: World Bank–KNOMAD staff estimates. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/ KNOMAD 2020). Note: LMIC = low- and middle-income country; e = estimate; f =forecast. 11 Migration and Development Brief 35 Figure 1.1a Remittances, Foreign Direct Investment, and Official Development Assis- tance Flows to Low- and Middle-Income Countries, 1990–2022 ($ billion) 900 FDI 700 Remittances 500 300 ODA 100 Portfolio flows -100 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; International Monetary Fund (IMF) Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. Figure 1.1b Remittances, Foreign Direct Investment, and Official Development Assis- tance Flows to Low-and Middle-Income Countries, Excluding China, 1990–2022 ($ billion) 600 Remittances FDI 500 400 300 200 ODA 100 Portfolio flows 0 -100 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank­ –KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. 12 RECOVERY — COVID-19 Crisis Through a Migration Len s Growth in remittance flows was exceptionally South Asia, and the Middle East and North strong (21.6 percent) in Latin America and Africa; 5.3 percent in Europe and Central Asia; the Caribbean. It was also strong in all other and 1.4 percent in East Asia and the Pacific, regions of the world, registering growth of be- excluding China (table 1.1 and figure 1.2).3 tween 6 and 10 percent in Sub-Saharan Africa, Figure 1.2 Remittance Flows by LMIC Region, 2020–21 Growth rate (percent, year-on-year) 21.6 2020 2021 20 9.7 8.0 7.3 6.2 6.2 5.3 5.2 2.8 1.4 0 -1.7 -3.3 -8.6 -14.1 -20 Latin Middle East Europe and South Asia LMICs Sub-Saharan East Asia America & and North Centra Asia Africa and Pacific Caribbean Africa (excl. China) Source: World Bank–KNOMAD staff. Note: LMICs = low- and middle-income countries. 13 Migration and Development Brief 35 Box 1.1 High-Frequency (Quarterly) dramatic than previously expected, with a Data Exhibit a Short-Lived Decline particularly sharp rise in Q2 2021 due mainly in Remittance Flows in Q2 2020 and to a low base in Q2 2020. Data for Q3 2021 for several countries suggest that growth is likely to Recovery Starting Q3 2020 moderate. Yet, growth for the year should carry High-frequency data on remittance flows remittance flows to above pre-pandemic levels. are available for 49 low- and middle-income Of the increase in flows during the first half countries (LMICs), accounting for about 77 of 2021, Latin America and the Caribbean percent of total remittance flows to LMICs. accounted for 40 percent, with remittances These data show a sharp drop in remittance gaining 32 percent (y/y) to $56.5 billion. flows in all regions in Q2 2020 in the immediate Momentum picked-up for flows to the large aftermath of COVID-19-related lockdowns, number of countries that receive remittances travel restrictions, and social distancing (figure from the United States. Central American B1.1.1). Starting in Q3 2020, flows began to countries also received increased remittances recover in response to various fiscal stimulus in response to recent hurricanes. Remittances measures implemented in most countries also recorded double-digit growth in the first worldwide. According to the latest quarterly half of 2021 in Europe and Central Asia (19 data, remittance flows to LMICs increased to percent), the Middle East and North Africa (22 $227 billion (or 3 percent of gross domestic percent), and South Asia (15 percent). East product) during the first half of 2021, regis- Asia and the Pacific and Sub-Saharan Africa tering year-on-year (y/y) growth of nearly 18 lagged among developing regions, register- percent. The increase in remittances was more ing gains of 3 and 6 percent, respectively Figure B1.1.1 Regional growth rates of remittances (high-frequency data) Remittances ($, quarterly, index 2020 Q1=100) 160 LMICs EAP 150 ECA LAC 140 MENA SAR 130 SSA 120 110 100 90 80 70 60 -50 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 Sources: World Bank–KNOMAD staff; IMF Balance of Payments Statistics, and various central banks. Note: EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; LMICs = low- and middle-income countries; MENA = Middle East and North Africa; SAR = South Asia; SSA = Sub-Saharan Africa. 14 RECOVERY — COVID-19 Crisis Through a Migration Len s As reported in World Bank/KNOMAD (2021), policy. In October 2021, world leaders at- a large number of households surveyed by tending the G-20 summit in Rome committed the World Bank, reported a significant drop to “…take steps to support the full inclusion in remittances while central banks recorded of migrants, migrant workers and refugees higher inflows. Causes include lower migration in their pandemic response and recovery rates, less remittance income per migrant, efforts independently of migration status.”5 isolation in origin communities, and greater health risks. The true size of remittances, In broad measure, signs of prospective easing which includes formal and informal flows, is in COVID-19 caseloads in the advanced econ- believed to be larger than officially reported omies during the early months of 2021 and data, though the extent of the impact of the lessening of restrictions on activity, buoyed COVID-19 on informal flows is unclear.4 consumer and business sentiment as well as the employment prospects of international migrants. In the United States, the largest host 1.2 Reasons for Recovery country for migrants, with over 52 million for- eign-born persons, the employment rate of for- In all regions of the world migrants seemed eign-born workers fell sharply and more than to have stepped up their support to families that of native-born workers in Q2 2020, but it back home, especially to countries affected has since recovered a great deal to close the by the spread of the COVID-19 Delta variant. gap (figure 1.3). Indeed, in most high-income Migrants’ willingness to help was enabled by countries of the Organization for Economic Co- a welcome pickup in economic activity and operation and Development (OECD), though employment in major destination countries, the unemployment rates of foreign-born work- grounded in exceptional COVID-19 emergency ers tend to be higher than those of the native fiscal stimulus and accommodative monetary born, and it is even wider in Spain and Sweden. Figure 1.3 Employment Levels of Hispanic, Foreign Born, and Native Born in the United States Employment in the US, Index (Feb. 2020 = 100) 105 95 Native born 85 Hispanic Foreign born 75 20 0 0 0 20 0 0 20 0 0 0 21 21 1 1 1 21 1 1 21 -2 -2 -2 l-2 -2 -2 -2 -2 -2 -2 -2 l-2 -2 b- n- p- n- b- n- p- ar pr ay ug ct ov ec ar pr ay ug Ju Ju Ju Ja Ju Fe Se Fe Se O M A M A D N M M A A Source: US Bureau of Labor Statistics. 15 Migration and Development Brief 35 In the Gulf Cooperation Council (GCC) coun- In Guatemala and Honduras, the increase in tries and the Russian Federation, higher oil remittances during the first nine months of prices (more than doubling to $82/barrel in 2021 compared to the same period of 2020 October 2021 from a year previous) and stron- was 37 percent and 33 percent respective- ger economic activity served to increase remit- ly—remittances to these countries increased tance flows to South Asia, Southeast Asia, and rapidly because of an effort by migrants to Central Asia (the latter largely from Russia). support families affected by recent hurricanes. Substantial increases in the prices of food sta- In the Caribbean countries of the Dominican ples over the same period (maize, 28 percent; Republic and Jamaica, remittances grew by and wheat, 8 percent) are likely to have en- 34 percent and 24 percent, respectively, in couraged more remittances to support families the first nine months of this year. (A depre- back home, notably in Sub-Saharan Africa. ciation of local currencies against the US dollar could be a plausible reason for the While economic recovery, fiscal stimulus, and strong increase in the Dominican Republic, higher oil prices favorably affected remittance alongside an increase in migration flows flows in all regions, the exceptional growth from Haiti due to the crisis in that country rate of 21.6 percent in Latin America and the (Florián 2021). For all Latin American coun- Caribbean (to reach a total of $126 billion) tries for which the United States is the top merits additional clarification. Although destination, labor shortages and increases in timely data are not readily available on transit weekly earnings in the United States have also migrants and stranded migrants, an increase contributed to the increase in remittances. in their numbers and the remittances they receive from overseas to support themselves An additional factor could be a resumption and pay smuggling fees seems to have been of travel and tourism to these destinations, a significant factor behind the strong increase which for long stays, in the case of “digital in remittances to the region, notably the 25 nomads”—people working remotely from percent growth in remittances to Mexico in these locations—could translate into remit- the first nine months of this year compared to tance inflows (box 1.2). According to the the same period of last year (see box 4.1 in Government of Mexico (2021), more than 7 section 4.3). Indeed, many other transit coun- million Americans entered the country during tries—e.g., Guatemala and Colombia, and the the first nine months of 2021. Though it is Arab Republic of Egypt and Morocco in the not stated how many remain in the country, a Middle East and North Africa region—are ex- number of Americans have relocated to Mexico periencing strong growth in remittance inflows. to work during the pandemic (Lopez 2021). 16 RECOVERY — COVID-19 Crisis Through a Migration Len s Box 1.2 Digital Nomads and Costa Rica will offer a short-term visa for Remittances remote workers (OECD 2021). Fund trans- fers received by such digital nomads can be Mexico is not alone. Many tourist destinations arguably counted as remittances. However, have experienced an increase in long-stay the developmental impacts of such transfers tourists from high-income nations who have are more akin to those from tourism receipts decided to take advantage of work-from-home (which mainly pay for one’s own living costs) arrangements. A new category of visa has than from migrant remittances (meant to emerged—the so-called “digital nomad” visa support families). It is likely that a part of the schemes that allow teleworking in the host increase in remittance flows to the Dominican countries. For example, Estonia launched a Republic, Jamaica, and Morocco may be due digital nomad program in August 2020, and to an increase in the number of teleworkers. After displaying remarkable resilience through 2020. Indonesia is set to record a drop one of the sharpest economic downturns in for the year, driven by decreasing flows its migrant host and home countries in 2020, from Malaysia and Saudi Arabia. the South Asia region experienced a surge in remittance inflows during 2021, though Remittance receipts among the developing gains were spread unevenly across countries. economies of the Middle East and North Inflows to the region are likely to reach $159 Africa have been favorable over the first half billion, growing by 8 percent in 2021. Economic of 2021, supported by a return to growth in the conditions in host countries were pivotal in European Union (EU) and the GCC countries. facilitating remittance inflows, as the surge Driven by surprisingly strong gains in inflows to in oil prices and modest opening of the GCC Egypt and Morocco, developing economies in economies played a clear part in the 2021 the region accrued remittances of $62 billion outturns. Flows to India (the world’s largest with growth registering 9.7 percent in 2021.7 recipient of remittances) are expected to reach Risks for the region remain high, however, since $87 billion, a gain of 4.6 percent—with the mobility restrictions due to COVID-19 could be severity of COVID-19 caseloads and deaths reinstated in key destinations. Geopolitical and during the second quarter (well above the regional tensions in Lebanon, Libya, the Syrian global average) playing a prominent role Arab Republic, and the Republic of Yemen per- in drawing altruistic flows (including for the sist, and may encourage flows through infor- purchase of oxygen tanks) to the country. As mal channels or even discourage remittances. for all developing regions, the 2022 outlook As EU growth softens and oil prices recede for remittances includes risks on the down- moderately into 2022, inflows to the region side, with high-frequency data signaling a are anticipated to slow to a moderate pace. slowdown for most South Asian countries After falling by 8.6 percent in 2020, remittance over the last several months of 2021.6 receipts in Europe and Central Asia are seen to Remittance flows to the East Asia and grow by 5.3 percent to $67 billion in 2021. The Pacific region, excluding China, are antic- strong performance has been due to strength- ipated to recover modestly by 1.4 percent ening economic activity in the EU, and in Russia in 2021, after a decline of 3.3 percent in on the back of surging energy prices. Ukraine 17 Migration and Development Brief 35 received inflows of $16.3 billion in 2021, 7.1 1.3 Top Remittance Source and percent higher than the previous year, driven Recipient Countries by a sharp rise in flows from Poland. Outward remittances from Russia to Central Asian coun- In 2021, the top five recipient countries for tries are expected to bounce back in the year, remittances are India, China, Mexico, the with the Russian economy posting stronger Philippines, and Egypt (figure 1.4, first panel). growth amid higher energy prices. And within India experienced a substantial 4.6 percent Central Asia, Kazakhstan is now experiencing gain in remittance inflows during 2021, as increasing demand for both high-skilled labor higher oil prices enabled stronger remittance in the oil industry and education (Russia), payments from expatriate workers among and low-skilled labor in agriculture and the the GCC economies, and the dramatic spread construction sector (other Central Asian of COVID-19 yielded additional financial economies). The outlook for 2022 is exposed support from the diaspora. Mexico’s surge in to downside risks, including a more substan- recorded inflows to $53 billion is tightly linked tial slowdown in major remittance-source to the US recovery—and gains in employ- economies, or energy market turmoil arising ment there for Mexican migrants—as well from a sudden decline in oil prices—yielding as to flows from home countries to the large a more sluggish advance in the year. number of Central American transit migrants. Remittances from Egyptian immigrant workers After contracting by 14.1 percent in 2020, increased to $33 billion in the year, a robust remittance flows to Sub-Saharan Africa are 12.6 percent advance, benefitting from higher expected to recover in 2021—registering a oil prices and returns from expatriates in the growth of 6.2 percent to reach $45 billion. Gulf, as well as the pickup in economic activ- Nigeria, the largest recipient in the region, ity in Europe and the United States. And in is experiencing a moderate rebound in re- Ukraine, remittance inflows increased sharply mittance flows, in part due to the increasing to $16 billion, on stronger demand for labor traction of novel policies intended to channel services in Central and Eastern Europe. inflows through the banking system. Figure 1.4 Top Recipients among Low- and Middle-Income Countries ($billion, 2021e) (Percentage of GDP, 2021e)* 87 44 35 30 53 53 28 27 26 25 24 24 36 21 33 33 23 18 18 16 p. ic s r a ico an sh m ia e an as ca o a a n al oa do ne di in ng in no th bl er ep na Re ur de ai ist ist m Ch ex ra In so pi lva pu ig To ba m nd N et Sa jik sk la Uk ab M ilip N Le Ja Re Sa Vi Le ng Pa Ho Ta Ar Ph Ba El yz t, rg yp Ky Eg Source: World Bank–KNOMAD staff. Note: *Somalia and South Sudan are excluded due to data validity. GDP = gross domestic product; e = estimate. 18 RECOVERY — COVID-19 Crisis Through a Migration Len s Among economies where remittance inflows Japan, the ASEAN-5,9 and several EU coun- stand at exceptionally large shares of gross tries, and notably among economies lacking domestic product (GDP)—and hence high- access to vaccines in Sub-Saharan Africa and light intrinsic dependence upon inflows from in parts of South and Southeast Asia (figure expatriates—are countries from Central Asia 1.5).10 Already the effects of the spread of the (links to Russia), from Central America (ties to Delta variant are apparent in signs of slippage the United States), Lebanon with a substan- in global economic activity. Intensification of tial diaspora, and several island economies bottlenecks in supply chains tied to COVID-19 (Tonga, Jamaica, Samoa) where the vagaries restrictions on manufacturing and transport/ of tourism revenues (and natural disasters) logistics, notably in East Asia, are affecting require substantial income augmentation from production in the advanced economies (figure overseas workers (figure 1.4, second panel). 1.6a).11 Shortages due to limited availability of critical inputs (notably microchips) for automo- biles, electronic equipment, and related prod- 1.4 Outlook for 2022: Downside Risks ucts are pushing consumer prices upward in high-income countries. Global inflation is being A resurgence of COVID-19 cases poses by far abetted by the recent surge in crude oil, natural the most important downside risk to the outlook gas, and coal prices—and global oil and ener- for global growth and employment,8 and hence gy markets are now expected to be undersup- remittance flows to LMICs. COVID-19 cases plied for the remainder of 2021, with oil prices have increased sharply in the United States, remaining at lofty levels into 2022 (figure 1.6b). Figure 1.5 Daily New Confirmed COVID-19 Cases (rolling seven-day average) The number of confirmed cases (rolling 7-day average) 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 20 20 0 0 0 20 0 20 20 0 0 20 21 21 1 1 1 21 1 21 21 1 -2 r-2 -2 l-2 -2 -2 -2 r-2 -2 l-2 -2 n- b- n- g- p- c- n- b- n- g- p- ar ay ct ov ar ay ct Ju Ju Ap Ap De Ja Ju Ja Ju Fe Au Se Fe Au Se O O M M M M N Source: Our World in Data. 19 Migration and Development Brief 35 Figure 1.6 Changes in Industrial Production and Oil Prices A. B. Percent change (3mma/3mma saar) Oil price ($/bbl), monthly average of Brent, Dubai, and WTI 90 USA IP 90 Euro Area 80 60 70 30 60 0 50 40 -30 30 -60 20 A 18 Ju 8 O 8 Ja 18 A 19 Ju 9 O 9 Ja 19 A 20 Ju 0 O 0 Ja 20 A 20 Ju 1 O 1 1 20 0 0 0 21 1 1 -1 l-1 -1 l-1 -2 l-2 -2 l-2 -2 -2 l-2 -2 -2 l-2 n- - n- - n- - n- pr ct pr ct pr ct pr ct n- n- Ja pr ct pr Ju Ju Ja Ja O A A Sources: OECD and World Bank. Note: $/bbl = US dollar per barrel; IP = industrial production; JPN = Japan; 3mma saar =seasonally adjusted annual rate; WTI = West Texas Intermediate. A slowdown in the pace of visa/work permit profile of growth ranging from 5.5 percent in issuance for the millions of returnees in the Sub-Saharan Africa to 1.8 percent in South GCC countries, especially as some govern- Asia. The view for South Asia is particularly ments seek to promote employment of their uncertain. Migrants who returned to their home own workers, is contributing to a depletion countries when lockdowns occurred in their of the migrant stock. Consequences include host countries may not be able to return to lower remittance flows to South Asia and their original jobs due to tightened immigration other regions in 2022 and the near term regulations and issuance of worker visas. The (see section 2 for more on this topic). number of foreign workers in GCC countries has continued to decline (see section 2). Remittance flows to LMICs are expected to grow at a moderate 2.6 percent pace to reach $605 billion in 2022, with the regional 20 RECOVERY — COVID-19 Crisis Through a Migration Len s 21 Migration and Development Brief 35 22 RECOVERY — COVID-19 Crisis Through a Migration Len s 2. Migration Trends In 2021 the stock of migrants is expected to fall decreased for the fifth year in a row, exhibiting for a second consecutive year, unprecedented the largest decline in 2020 (De Statis 2021). in history. Data on migration flows are pub- lished with a lag, hence no authoritative figures A worrisome structural trend from the view- can be cited for 2021. Data and trends gleaned point of many LMICs, especially in the Middle from various sources suggest that return migra- East and North Africa, South Asia, and tion has increased in 2021, while new migration Southeast Asia, is the decline in the number flows have remained subdued after decreasing of foreign workers in the GCC countries, sharply in 2020 due to the COVID-19 crisis. particularly in Saudi Arabia (table 2.1 and figure 2.1). The GCC countries will require more According to the United Nations Department skilled workers, but are likely to require fewer of Economic and Social Affairs (UN DESA lower-skilled foreign workers in the future. 2020), the international migrant stock de- Saudi Arabia granted 12 percent fewer work creased by about 2 million people in 2020. visas in Q1 2021 relative to the same period in Recent data released by the OECD (2021) 2020, while Oman reported a 15 percent (y/y) show that migration flows fell in all OECD decline in Bangladeshi workers in Q1 2021. countries in 2020. Permanent migration into Bahrain cut the number of flexi-permits from OECD countries declined by 30 percent to 47,000 in 2020 to 24,000 in 2021. The Kuwaiti reach 3.7 million, the lowest level since 2003. cabinet has tasked its Manpower Authority In the United Kingdom, the foreign-born with getting another 100,000 citizens to work population is estimated to have declined from in the private sector within four years to reduce 9.2 million in Q3 2019 to 8.3 million in Q3 2020 the state’s public sector wage bill. In Pakistan, (Sumption 2021). In Germany, net immigration deployment of workers to the GCC and other destination countries declined from around 626,000 in 2019 to 225,000 in 2020 and further to 152,000 in the first nine months of 2021. 23 Migration and Development Brief 35 Figure 2.1 The Number of Foreign Workers in Saudi Arabia Continues to Decrease Number of employed foreign workers (million) 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2020 2021 -Q1 -Q2 -Q3 -Q4 -Q1 -Q2 -Q3 -Q4 -Q1 -Q2 -Q3 -Q4 -Q1 -Q2 -Q3 -Q4 -Q1 -Q2 Source: General Authority of Statistics, Saudi Arabia. Table 2.1 Year-on-Year Change in the Number of Expatriate Workers Y/Y change (thousand persons) Y/Y change (%) Bahrain (Q2 21–Q220) -41 -9.8 Qatar (Q1 21–Q1 20) -122 -5.9 Oman (Q2 21–Q2 20) -160 -10.3 Saudi Arabia (Q2 21–Q2 20) -581 -8.6 Source: Local authorities. Note: Y/Y = year-on-year. Temporary labor migration also dropped 20.4 million in December 2020, not including sharply in Japan (66 percent), Republic of 4.8 million Venezuelan migrants (and 5.7 Korea (57 percent), Canada (43 percent), million Palestinian refugees registered by the Australia (37 percent), and the United States United Nations Relief and Works Agency).12 (37 percent) (OECD 2021). Flows of seasonal workers decreased by 9 percent. According Return migration has increased due to falling to the OECD (2021), new asylum application employment and incomes for migrant workers. cases decreased by 31 percent in 2020, and For example, about 1.3 million Romanians preliminary data for the initial months of returned to Romania, and Lithuania had more 2021 for EU countries indicate a similar trend. citizens returning than leaving for the first time The United Nations High Commissioner in years (The Economist 2021). Malaysia had for Refugees (UNHCR) reported that the repatriated nearly 90,000 undocumented mi- number of international refugees reached grant workers since November 2020. Between 24 RECOVERY — COVID-19 Crisis Through a Migration Len s May 2020 and July 2021, a reported 612,000 (a decrease of 35 percent from the previous overseas Filipino workers returned due to the year). The number of persons returned by pandemic. Similarly, about 180,000 migrants Libya has doubled since 2020; according to the returned to Indonesia. The International UNHCR, the majority of those being returned Organization for Migration (IOM) assisted are nationals of Sudan (17 percent), Mali 42,181 migrants to voluntarily return in 2020 (11 percent), and Bangladesh (11 percent). 25 Migration and Development Brief 35 26 RECOVERY — COVID-19 Crisis Through a Migration Len s 3. Policy Issues Policy efforts must continue to keep remittanc- Rome Leaders Declaration called for the moni- es flowing by lowering the cost of remittances, toring of National Remittance Plans, gathering increasing access to banking for migrants of more granular data, and continuing facilita- and remittance service providers, and mak- tion of the flow of remittances and reduction of ing policy responses to the COVID-19 crisis average remittance transfer costs (G-20 2021). (in terms of access to vaccines, health care, housing, and education) inclusive of migrants. Migrants may also need protection against The Call to Action to Keep Remittances overwork or underpayment by employers Flowing, launched last year by Switzerland and during the crisis. And many host communities the United Kingdom in collaboration with the that are facing unexpectedly large returns of Global Knowledge Partnership on Migration migrants may need support to provide health and Development (KNOMAD)/World Bank, care, quarantine facilities, and other social outlines a set of useful policy priorities in this services. These policy recommendations were area (box 3.1). As mentioned earlier, the G-20 featured in the past two issues of this Brief (#33 and #34) and are summarized in table 3.1. Table 3.1 Government Policy Responses during the Crisis Supporting Remittance Supporting Migrants Supporting Migrants’ Families Infrastructure • Support stranded migrants. • Support social services • Improve collection of and provide cash transfers high-frequency, timely • Extend cash transfer pro- to families left behind. data across remittance grams to support internal and international migrants. corridors and channels. • Provide access to vaccines, • Be inclusive of migrants in pro- health services, educa- • Certain anti-money launder- vision of vaccines, health ser- tion, and housing. ing/combating the financing vices, education, and housing. of terrorism requirements • Protect migrants could be temporarily from wage theft. simplified to incentivize online and mobile money transfers. • Support returning migrants (access to training, jobs, credit • Mitigate factors that prevent for business investment). customers or remittance service providers of digital remittances from accessing bank (transaction) accounts. Source: World Bank/KNOMAD 2021. 27 Migration and Development Brief 35 Box 3.1 Call to Action: Keep taxes on remittances. A year and a half later, Remittances Flowing with remittances proving to be resilient and serving as a financial lifeline during an unprec- In May 2020, shortly after remittances edented global crisis, the C2A continues to began to plummet due to the pandem- provide space for countries and stakeholders ic-induced lockdowns, the governments to share experience, learn from best practices, of Switzerland and the United Kingdom develop solutions, and take joint actions. “A joined forces to rally other governments change of course is needed to build a stronger (by now 31 governments), United Nations case for the role of remittances as a gateway agencies, industry partners, and civil society for financial inclusion and the achievement around a call to action (C2A): “Remittances of the SDGs,” according to the annual stock- in Crisis: How to Keep Them Flowing.” taking report. Also, the C2A recognizes the importance of timely and high-frequency The C2A included specific policy recom- monitoring of remittance flows and a need mendations, many of which were heeded by to improve statistical reporting systems in governments, such as recognizing remittance remittance-source and recipient countries. services as essential, stepping up efforts to reduce remittance costs, and not imposing Source: C2A(2021). 3.1 Remittance Costs (SDG to Sub-Saharan Africa remained particularly indicator 10.c.1) high (above 8 percent). Corridor-specific data (reported in the regional sections) reveal The cost of sending money across interna- that remittance costs tend to be higher when tional borders continued to remain high, remittances are sent through banks than around 6.4 percent on average in Q1 2021, through digital channels or through money or more than double the SDG target of 3 transmitters offering cash-to-cash services.13 percent (figure 3.1). The cost of remittances 28 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 3.1 How Much Does It Cost to Send $200? Regional Remittance Costs, 2020–21 (Percent) 10 8.9 9 8.0 8 7.1 7.0 6.8 6.7 6.5 6.6 7 6.4 6.3 6.0 6 5.5 5.0 5 4.6 4 3 2 1 0 Global SAR LAC ECA EAP MENA SSA Average Q1 2020 Q2 2021 SDG target 3% by 2030 Source: World Bank Remittance Prices Worldwide database. Note: Red dotted line represents the SDG 10 target of 3 percent. EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; SAR = South Asia; SDG = Sustainable Development Goal; SSA = Sub-Saharan Africa. 3.2 Digital Remittances remittances tend to be cheaper, allowing small- and De-risking er, more frequent, remittance transactions. The World Bank uses the definition of digital Digital Remittances remittances to refer to remittances sent via a The COVID-19 crisis seems to have caused a payment instrument in an online or self-as- huge shift away from handling cash to using sisted manner and received into a transaction digital payment channels that do not require account maintained at a bank or non-bank physical contact. Hand carrying of both cash deposit taking institution (say a post office), and in-kind remittances (i.e., goods instead of mobile money or e-money account (World money) across national borders was affected Bank 2021a). According to the Remittances by travel restrictions, increasing the importance Prices Worldwide, in Q1 2021, the global of digital transfers. During the COVID-19 average for digital remittances reached crisis, international remittances sent and 5.1 percent, while the global average for received via mobile devices increased to reach non-digital remittances was 6.9 percent. $12.7 billion in 2020 (up 65 percent compared Digital services account for 26 percent of to 2019). About 80 percent of that amount was all services RPW collected in Q1 2021. in Sub-Saharan Africa. However, this amount is Most remittance transactions, however, a small fraction of the total volume of remit- continue to involve cash, because digital tances, implying that there is great potential remittances are only accessible through bank for this channel to grow among the 5.2 billion accounts. Many migrants do not have bank mobile phone users in the world. Mobile 29 Migration and Development Brief 35 accounts (and credit/debit cards) in their Derisking country of destination, and therefore are The Financial Action Task Force (FATF) defines unable to use digital remittance channels. ID de-risking as “the phenomenon of financial requirements remain onerous, often requiring institutions terminating or restricting business face-to-face verification. Interoperability relationships with clients or categories of clients among telecommunications systems, and to avoid, rather than manage, risk.” Banks in general a reluctance among telecommu- have continued to take a risk-averse approach nications companies to get into financial through the COVID-19 crisis, adversely af- services, has also constrained the growth of fecting remittance service providers’ access to international remittances via mobile devices. correspondent banking. The FATF and some In broad terms, remittance service providers regulatory agencies have issued clarificatory do not have easy access to bank accounts. statements and reports to discourage such Financial technology (FinTech) startups approaches. For example, AUSTRAC proposes continue to face difficulty in opening or that with appropriate systems and processes in maintaining accounts with international place, banks should be able to manage high- correspondent banks due to the practice risk customers, including those operating remit- of de-risking. The problem of de-risking is tance services. Similarly, the European Banking more acute in the case of companies that use Authority published Guidelines on ML/TF cryptocurrencies. This is likely to affect the Risk Factors (focused on money laundering implementation of recent digital initiatives and terrorism financing), clarifying that “the such as El Salvador’s Chivo wallet (that uses application of a risk-based approach to AML/ the bitcoin lightning network) (Iavorskyi 2021). CFT does not require financial institutions to In some countries (Afghanistan, Lebanon, refuse, or terminate, business relationships with Turkey and Venezuela), people have started entire categories of customers that are consid- using cryptocurrencies for sending remit- ered to present higher ML/TF risk” (EBA 2021). tances. However, the use of cryptocurrencies The FATF launched a 2020 project on unin- is hampered by price volatility in addition to tended consequences, noting that de-risking regulatory constraints. In the case of central can result in increased costs of payments bank digital currencies (CBDCs)–digital and concentration for correspondent versions of national official currencies–such banking and remittance services, and have as Nigeria’s eNaira, AML/CFT considerations particularly acute impacts on small states, may be less of an issue than cryptocurren- emerging market economies, and fragile, cy-based remittances.14 However, it remains conflict-affected countries (FATF 2021). to be seen to what extent retail CBDCs The FATF’s next step will be to examine become popular for purposes of sending what actions could mitigate the identified and receiving international remittances.15 unintended consequences (FATF 2021). 30 RECOVERY — COVID-19 Crisis Through a Migration Len s 31 Migration and Development Brief 35 32 RECOVERY — COVID-19 Crisis Through a Migration Len s 4. Regional Trends in Migration and Remittance Flows 4.1 Remittances to East Asia and the with other external resource flows, notably Pacific Declined in 2021 with ODA—remittances of some $77 billion (excluding China) contrasted with bilateral and Remittance trends. Formal remittances to the multilateral ODA of an estimated $7 billion East Asia and Pacific region are projected to in 2020 (figure 4.1). FDI has proven much fall by 4 percent in 2021 to $131 billion due more volatile than remittance inflows, with to the adverse impact of COVID-19. In 2022, dynamics tied more closely to the business remittances are anticipated to decline by 0.3 cycle, and portfolio flows echo similar patterns. percent due to the anticipated continuation of Despite expectations for an easing of flows containment measures in major destination in the near term, remittance receipts have countries and their effect on migrant-intensive evolved into a significant—and less volatile— sectors. Trends in receipts for the region have source of external funding for the region. compared favorably, over differing intervals, Figure 4.1 Resource Flows to East Asia and Pacific (excluding China), 1990–2022 ($ million) 100,000 Remittances 80,000 60,000 FDI 40,000 20,000 ODA 0 -20,000 Portfolio flows -40,000 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. 33 Migration and Development Brief 35 Inflows to the Philippines are estimated to grow an increase of 0.7 percent observed during the by 3.8 percent in 2021 after declining by 0.7 first eight months of the year. Further declines percent in 2020. The United States remains of 5 percent are also anticipated for Indonesia by far the primary source of remittances for in 2021, driven by falling remittance inflows the Philippines (almost 40 percent in 2020). from Malaysia and Saudi Arabia, which to- Remittance flows from the United States to the gether contributed to 60 percent of its receipts Philippines remain resilient, growing by 7 per- in 2020. In 2021, the top regional recipients cent in the first eight months of 2021 compared in terms of remittances’ share of GDP include to the same period of 2020. The sharp fall in many smaller economies such as Tonga, remittances from the GCC observed in 2020 Samoa, and the Marshall Islands (figure 4.2). (11.2 percent) appears to be recovering, with Figure 4.2 Top Remittance Recipients in the East Asia and Pacific Region, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 53.0 43.9 36.2 21.1 18.1 12.8 9.2 9.4 9.0 8.8 8.2 7.7 7.5 5.7 4.9 2.2 1.5 1.2 0.5 0.4 na es do m sia nd ar am sia a lia ji a oa s es te ji i tu . am at ts nd Fi Fi di ng a es ua in in nm .S go hi la m rib ne ay bo tn tn sla pp pp To -L C ai Sa an ed on al ie ie ya Ki or lI Th ili ili V V M V ,F M M In al Ph Ph m C sia sh Ti ar ne M ro ic M Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. Note: GDP = gross domestic product; e = estimate. Remittance costs. The average cost of the five highest-cost corridors (excluding sending $200 in remittances to the East Asia South Africa to China, which is an outlier) and Pacific region decreased slightly to 6.7 averaged 15 percent. Money transfer costs percent in Q1 2021, compared with 6.9 percent from Thailand to neighboring countries in in Q4 2020. In Q1 2021, the five lowest-cost Southeast Asia remained among the highest, corridors for the region averaged 2.7 percent averaging 13.8 percent in Q1 2021 (figure 4.3). for transfers primarily to the Philippines, while 34 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.3 Remittance Fees to the Philippines Are Among the Lowest in the East Asia and Pacific Region A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 25 2020 Q1 2021 Q1 20 15 10 5 0 Singapore Saudi Kuwait to United Singapore Thailand Thailand Thailand Thailand South to Arabia Philippines Arab to to to to to Africa Philippines to Emirates Indonesia Vietnam Myanmar China Indonesia to China Philippines to Philippines Source: World Bank Remittance Prices Worldwide database. Note: Cost of sending $200 or equivalent. Migration trends. Migrant workers are among Continued raids, arrests, and detention by the most vulnerable groups affected by the authorities are deterring undocumented COVID-19 pandemic. From losing jobs to migrants in Malaysia, and even refugees, from being stranded and lacking access to health coming forward to seek the treatment, testing, care and support services, such workers are or vaccinations for COVID-19 that are being struggling to cope, even more with additional offered to them.16 The government has repa- movement restrictions induced by the spread triated nearly 90,000 undocumented migrant of the Delta variant. About 700,000 migrant workers since November 2020 under an am- workers in Thailand, mostly in the tourism, nesty program to either legalize o r send such services, and construction industries, lost workers home. The Human Resource Ministry their jobs because of pandemic-related recently took issue with a jobs portal initiative restrictions in 2020. The country’s Minister of by the Bangladeshi embassy to help its undoc- Labor ceased proactive COVID testing and umented workers find (legal) jobs, asserting health care assistance for migrant workers that only the government’s official portal and in Bangkok and its surrounding provinces. licensed private recruiters should be used. To In addition, an anticipated 2 million undoc- speed up vaccination of documented migrant umented migrants were excluded from the workers, a private-public partnership was national COVID-19 vaccination program. launched wherein companies in key industries pay a modest fee to cover the cost of adminis- tering China’s Sinovac vaccine on site.17 Labor 35 Migration and Development Brief 35 shortages in the plantation sector compelled pandemic, and many are struggling to find the Malaysian government in October to lift a gainful employment. Between May 2020 ban on the entry of foreign workers imposed and July 2021, a reported 612,000 overseas since June 2020 due to COVID-19.18 Workers Filipino workers returned due to the pandemic. will need to be fully vaccinated in addition to Many were yet to find jobs, with unemploy- being tested and quarantined upon arrival. ment rates among returnees at 83 percent three months after arrival. Nearly half of the After being categorized as Tier 3 in the US returnees had not registered or accessed State Department’s (June) “2021 Trafficking reintegration assistance from the government, in Persons Report,” the lowest ranking that a which includes a one-time cash assistance country can receive, the Malaysian government payment of ₱10,000 (~US$200) (IOM 2021a). announced that it would increase supervision In Indonesia, around 180,000 migrant workers of labor operations, review contracts, and returned home, with 75 percent still looking evaluate recruitment fees. The report highlight- for and unable to find jobs (SBMI, IOM, and ed the “debt bondage” that migrant workers UNDP 2021). Most returnees to the region experienced from paying exorbitant fees to re- do not have any form of social protection cruitment agencies or agents. In the past year, to rely on, apart from Filipino workers, who the United States had imposed import bans on are covered through membership in the three Malaysian companies over allegations Overseas Workers Welfare Administration. of forced labor in their operations, centering on the issue of exorbitant recruitment fees. 4.2 Remittances to Europe and Starting in September, Hong Kong SAR, China, Central Asia to Rebound in 2021 has allowed fully vaccinated foreign domestic workers from Indonesia and the Philippines Remittance trends. After falling 8.6 percent into the city, but they will have to undergo 21 in 2020, remittance receipts in Europe and days of compulsory quarantine in a single Central Asia are estimated to have gained designated hotel at a cost of HK$16,800 5.3 percent to reach $67 billion in 2021. The (~US$2,158) per worker. Australia is offering a strong performance was due to improved new agriculture visa that provides a two-year economic activity in the EU and surging pathway to residency. The visa was created to energy prices. Looking forward, remittances address pandemic-induced labor shortages to the region are projected to grow at a and is aimed primarily at Pacific Islander slower pace in 2022, posting 3.8 percent and Southeast Asian workers. A shortage of growth. The forecast is subject to downside frontline health care workers in richer coun- risks, including a sharper-than-expected tries is compelling many to recruit workers slowdown in major remittance-sending from abroad. Germany recently entered into economies or energy market turmoil arising a placement agreement with the Indonesian from a sudden decline in oil prices that could Migrant Workers Protection Board for combine with deteriorating fundamentals and Indonesian nursing staff to alleviate domestic lingering vulnerabilities in some countries. shortages. Selected care workers will undergo professional training and learn German before Remittances are the largest source of external leaving Indonesia. The first arrivals are expect- financing in the Europe and Central Asia ed by the second half of 2022 at the earliest. region. In 2020, remittances flows exceeded the sum of foreign direct investment (FDI), Return migration. Sizeable numbers of East portfolio flows, and official development Asian migrant workers returned home in assistance (ODA), as recession exacted a 2020 due to layoffs induced by the global toll on the former two flows (figure 4.4). 36 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.4 Resource Flows to Europe and Central Asia, 1990–2022 ($ million) 200,000 FDI 150,000 100,000 Remittances 50,000 ODA 0 Portfolio flows -50,000 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. The economies of Central and Eastern Russia seem to be closely correlated with Europe have benefitted particularly from the activity in Russia’s nontradable sector, where rebound in the Russian and Polish economies most migrant workers tend to be employed and rising oil prices. Remittances account for (Idrisov, Kazakova, and Polbin 2015). The significant portions of Central and Eastern nontradable sector has, in turn, been ben- European economies. Remittances from efiting from higher oil prices (figure 4.5). 37 Migration and Development Brief 35 Figure 4.5 Higher Oil Prices Boosted Outward Remittances from Russia in 2021 ($ million) ($/bbl) 11,000 130 Outward remittances, Russia Brent crude ($/bbl) (Right Axis) 110 9,000 90 7,000 70 5,000 50 3,000 30 -1,000 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2013 2019 2020 2021 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Source: Haver Analytics and World Bank–KNOMAD staff. Note: $/bbl = dollar per barrel. Ukraine, the region’s largest recipient of With substantial fiscal deficits, these countries remittances (figure 4.6), is estimated to have cannot afford to increase public expenditure received inflows of some $16.3 billion in 2021, to support domestic demand, and thus are 7.1 percent higher than the previous year. This highly dependent on overseas remittances. was driven by a sharp rise in flows from Poland, which is the largest source of remittances from Outward remittances from Russia to several Ukrainian migrant workers (accounting for Central Asian countries are expected to bounce more than 30 percent in recent years). Three- back this year, with the Russian economy quarters of work permits issued to foreigners in posting stronger growth amid higher energy Poland were handed out to Ukrainian migrant prices. Money being remitted to Armenia and workers. Amid the COVID-19 pandemic, Uzbekistan, for example, rose by 22 percent remittances to Ukraine declined by 3.6 percent and 23 percent, respectively, in the first half in 2020. But this falloff was much smaller than of 2021 compared to the same period in 2020 initially expected, in part because of money (figure 4.7). The Kyrgyz Republic also saw its sent by transit migrant workers left outside remittances from migrant workers in Russia European countries by lockdowns. As a share rise by 6 percent. Job losses among Central of GDP, remittance receipts in the Kyrgyz Asian migrants in Russia during the COVID-19 Republic and Tajikistan lead among regional pandemic in 2020, along with the weakness of economies, near 30 percent each (figure 4.6). the Russian ruble, caused a sharp drop in labor remittances to origin countries at that time. 38 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.6 Top Remittance Recipients in Europe and Central Asia, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 30.1 16.3 27.8 10.4 16.7 8.0 7.6 15.2 12.3 11.6 11.4 10.5 9.2 4.5 9.0 2.5 2.3 2.2 2.0 1.9 e n ia n ia ic n ia a va an ic vo va ia n o a a ia in ni in in tio ta ta ta gr bl bl an rb rg rg do do ist so en ov ba ov ra kis kis kis ne pu pu Se o eo ra m jik Ko ol ol Uk m e eg eg Al be i be de te Ro Re Re j G G M M Ta Ta Ar rz rz on Uz Uz Fe yz yz He He M rg rg n ia d d Ky Ky ss an an Ru ia ia sn sn Bo Bo Source: World Bank–KNOMAD staff; IMF, World Economic Outlook. Note: GDP = gross domestic product; e = estimate. Figure 4.7 Outward Remittances from Russia to Central Asian Countries Bounced Back in 2021 Personal remittances from Russia 2020 Q1=100 180 Azerbaijian Armenia Kyrgyz Republic Tajikistan Ukbekistan 160 140 120 100 80 60 40 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 Source: Haver Analytics and World Bank–KNOMAD staff. 39 Migration and Development Brief 35 The Kazakh government took an accommo- more than $1.5 billion, with the strengthening dating stance toward migrant workers from of oil and gas prices (oil and related products Central Asia and Europe last year, resulting account for more than 75 percent of the coun- in an increase in outward remittances from try’s exports). Kazakhstan is now experiencing Kazakhstan to the Kyrgyz Republic and Russia, growing demand for both high-skilled labor which are typically among the largest recipi- in the oil industry and education (mostly from ents of the country’s remittances (figure 4.8). In Russia), and low-skilled labor in agriculture 2021, remittances from Kazakhstan to the re- and the construction sector (mostly from the gion are estimated to have remained strong at Kyrgyz Republic, Uzbekistan, and Tajikistan). Figure 4.8 Outward Remittances from Kazakhstan Remained Strong in 2021 Personal remittances from Kazakhstan 2020 Q1=100 180 Total 170 To CIS countries 160 150 To Russia 140 130 120 110 100 90 80 70 60 50 40 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 Source: Haver Analytics and World Bank–KNOMAD staff. Note: CIS = Commonwealth of Independent States. Remittance costs. The average cost of Migration trends. Russia has taken various sending $200 to the Europe and Central Asia measures to address labor shortages; the region rose modestly to 6.6 percent in Q1 government estimates that around 5 million 2021 from 6.5 percent a year earlier, mostly foreign workers have left the country since the reflecting a sharp increase of costs in the onset of the COVID pandemic. The govern- Turkey-Bulgaria corridor. Russia remained ment has lifted the reentry ban for 300,000 mi- one of the lowest-cost senders of remittanc- grant workers from Tajikistan and Uzbekistan, es globally, with the total cost of remitting introduced a special program to recruit from the country falling from 1.8 percent to 10,000 construction workers from Uzbekistan, 1.0 percent. The differences in costs across and announced a plan to vaccinate Uzbek corridors in the region are substantial; the migrants prior to their arrival in Russia. The highest costs for sending remittances were construction sector has been particularly from Turkey to Bulgaria, while the lowest costs affected due to its dependence on Central were from Russia to Georgia (figure 4.9). Asian low-skilled migrants. Consequently, 40 RECOVERY — COVID-19 Crisis Through a Migration Len s there was a significant increase in the number to the same period of 2020. Most work per- of work permits and patents granted in the mits were issued to nationals of Uzbekistan, period January–September 2021, compared Tajikistan, and the Kyrgyz Republic. Figure 4.9 Russia Remained the Least Expensive Country from Which to Send Money A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 20 2020 Q1 2021 Q1 15 10 5 0 Russian Russian Russian Russian Russian Czech United Switzerland United Turkey Federation Federation Federation Federation Federation Republic Kingdom to Kingdom to to Georgia to Kyrgyz to to Ukraine to to to Albania to Bulgaria Republic Azerbaijan Kazakhstan Ukraine Bulgaria Albania Source: World Bank–KNOMAD staff calculations and Remittance Prices Worldwide. Note: Cost of sending $200 or equivalent. 4.3 Remittances to Latin America new historic high of $126 billion in 2021, and the Caribbean Surged in 2021 registering an exceptionally strong growth rate of 21.6 percent compared to 2020. Remittance trends. Officially recorded FDI and portfolio investment flows also remittance flows into Latin America and marked a recovery, but remittances contin- the Caribbean are expected to reach a ued to outpace these flows (figure 4.10). 41 Migration and Development Brief 35 Figure 4.10 Remittances, Foreign Direct Investment, and Official Development Assis- tance Flows to Latin America and the Caribbean, 1990–2022 ($ million) 200,000 FDI 150,000 100,000 50,000 Remittances Portfolio flows ODA 0 -50,000 02 03 05 07 08 11 13 15 17 19 19 0 19 1 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 9 21 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. Mexico, the region’s largest recipient of remit- 4.11). During times of economic crises and tances, accounting for about 42 percent of disasters, migrant workers save and remit a the regional total, is projected to post record larger portion of their paychecks than they remittances estimated at $52.7 billion in 2021. would during normal times (KNOMAD 2015). Remittances are even more important as a The adverse effects of COVID-19 on countries source of hard currency for several smaller and the damage brought by hurricanes Grace economies in the region for which remittances and Ida have contributed to an increase in re- represent more than 20 percent of GDP (figure mittance flows to Mexico and Central America. 42 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.11 Top Remittance Recipients in Latin America and the Caribbean, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 26.6 26.2 52.7 23.6 18.0 15.5 15.4 11.7 9.2 15.0 7.3 6.1 10.5 8.6 7.3 7.0 4.1 4.0 3.5 3.1 ico a ic a r as il r ca iti r as ca a a iti ic ica e do do do e az al bi al gu liz bl bl Ha Ha . ur ur am ai ai in m m ex m Br Be lva ua lva pu pu ra m m nd nd m te te lo rin M ica Ja Ja Ec Re Re Sa Sa Do Ho Ho ua ua Co Su N G G El El n n ica ica in in m m Do Do Sources: World Bank–KNOMAD staff estimates; World Development Indicators; and IMF Balance of Payments Statistics. Note: GDP = gross domestic product; e = estimate. Monthly data point directly to the importance to Guatemala, 34 percent to the Dominican of conditions in the US economy for remittanc- Republic, 33 percent to Honduras, 31 per- es to the region. During the first eight months cent to El Salvador, 26 percent to Colombia, of 2021, US recovery was accompanied by 25 percent to Mexico, and 24 percent to a large increase of 17 percent in remittanc- Jamaica, during the first nine months of 2021 es to Brazil and 16 percent in Nicaragua compared to the same period of 2020 (figure compared with the same period of 2020. 4.12). Remittances to Ecuador surged by 43.6 Moreover, an increase of 37 percent accrued percent during the first semester of 2021. Figure 4.12 Remittance Flows to Latin America and the Caribbean Continue Strong Year-on-year growth, 3-month average (percent) 90% 80% Mexico El Salvador 70% Colombia Dominican Rep. 60% Guatemala Nicaragua 50% Jamaica 40% 30% 20% 10% 0% -10% -20% -30% Fe 19 M 19 Fe 20 M 20 Fe 21 M 21 A 19 M -19 Ju 19 Ju 9 A -19 Se 19 O 19 N -20 D 19 Ja 19 A 20 M -20 Ju 20 Ju 0 ug 0 Se 20 O 20 N -20 D 20 Ja 20 A 20 M -21 Ju 21 Ju 1 ug 1 Se 21 21 1 2 l-2 2 l-2 n- b- n- b- n- b- - - n- - p- - - - - n- - p- - - - - n- - p- ar pr ay l ug ct ov ec ar pr ay ct ov ec ar pr ay Ja A A Sources: Central banks of the respective countries. 43 Migration and Development Brief 35 The United States is the largest recipient of cross-border restrictions during the COVID-19 migrants from developing countries as well as crisis, it was not possible to carry cash physical- the largest source of remittances. The US econ- ly to Mexico. Dinarte et al. (2021) found that omy has resumed growth, with GDP reaching municipalities that used to receive remittances a robust annualized rate of 6.7 percent in Q2 through informal channels (i.e., those near the 2021 but easing to a 2 percent pace in Q3 border) saw an increase in recorded remit- 2021 as spending on consumer durables fell tances and in the number of bank accounts sharply (US Bureau of Economic Analysis opened since the beginning of COVID-19. 2021). Hispanic and Latino employment in the United States picked up considerably to Another significant factor behind the increase almost precrisis levels (see figure 1.3 in section in the volume of remittances to Latin America 1). Recovery in employment levels—together and the Caribbean is likely the increase in the with government assistance through loans number of transit migrants in the region en to small and medium enterprises, grants to route to the United States. In particular, the local governments, social benefits, and sav- spectacular increase in remittances in Mexico ings—enabled migrants to send remittances may reflect funds received by transit migrants to family and friends in origin countries. from Honduras, El Salvador, Guatemala, Haiti, Venezuela, Cuba, and many other nations One of the reasons for the buoyancy of remit- (box 4.1). During the first nine months of 2021, tances to Latin America and the Caribbean the number of foreign-born undocumented in the face of the COVID-19 pandemic is persons in Mexico increased to 264,772 the economic stimulus packages legislated compared to 142,694 in all of 2020 (table in the United States (see Migration and B4.1.1). Since migrants are staying longer in Development Brief 34). Similarly, recovery in transit locations, they need to receive funds US employment explains the large increase in from their families outside Mexico to support remittances to Mexico and to the region (US living and travel expenses, and in many cas- Bureau of Labor Statistics). In addition, the 8 es, to pay smugglers (“coyotes”). Deportees percent increase in average weekly earnings and returnees are also likely to bring back for all employees in the construction sector, their savings.21 Colombia, Costa Rica, and where Hispanics are widely employed, has Panama have received a significant number also contributed to the surge in remittances of transit migrants from Haiti and Venezuela. from March 2020 to September 2021 (US Bureau of Labor Statistics 2021).19 Moreover, According to Colombian migration statistics, policies put in place by the US government more than 25,000 migrants crossed into were effective in buoying some small and Colombia during the first nine months of 2021, medium enterprises affected by COVID-19 while Costa Rica and Panama received about (Gourinchas et al. 2020). And data on hous- 55,000 and 32,000 migrants, respectively ing show that the output of the construction (a large portion of these from Haiti) (Castro sector surpassed its precrisis level, as growth 2021). According to the Working Group increased by 17.4 percent from one August of Refugees and Migrants coordinated by to the next (US Census Bureau 2021). UNHCR and IOM, the number of Venezuelans in Ecuador will reach 52,550 and transit Another reason for the increase in the volume migrants will reach 90,000 by the end of 2021. of remittances is the shift from informal to formal channels (World Bank/KNOMAD 2021).20 Due to containment measures and 44 RECOVERY — COVID-19 Crisis Migration and Through Len s Brief 35 Development a Migration Box 4.1 Could the Surge in Remit- members already in the United States, who are tances to Mexico Be Explained by supporting their efforts to join them. Some of an Increase in Transit Migration? the Mexican migrants who get apprehended while trying to enter the United States may Remittance flows to Mexico rose by an ex- also receive remittances from such relatives. traordinary $7.3 billion (25 percent) in the first Using official data on transit migrants together nine months of 2021, compared to the same with plausible assumptions about living costs period in 2020. The most likely explanation and smuggling fees per person, a back-of-the- is the increase in transit migration. To pay for envelope calculation estimates that the grand their living and travel costs—including the fees total of such costs would be nearly $4 billion to be paid for illegal border crossings—transit (table B4.1.1). These preliminary calculations migrants need to receive remittances from may understate the number of undocumented outside Mexico. This includes those from family migrants in Mexico and the level of coyote fees. Table B4.1.1 Back-of-the-Envelope Calculation of Remittances Sent to Transit Migrants and Mexican Returnees in Mexico in 2021 (January–September) # of Persons Per person cost assumed (US$) Cost ($, millions) Living costs for temporary residents, regional visitors, and undocumented 388,272 2,400 932 migrants in Mexico Payments to smugglers by undocu- mented migrants in Mexico (assuming 185,340 10,000 1,853 70% of undocumented paid fees) Payments to smugglers by single adult Mexicans apprehended (assuming 111,599 10,000 1,116 70% of them paid such fees) Total living and smuggling costs 3,901 Sources: Original calculations based on Mexican Migration Statistics; Government of Mexico (2020). Note: Living costs for temporary residents, regional visitors, and undocumented migrants in Mexico: Since many migrants have families in the United States and at home, they receive remittances to support their living costs in Mexico. According to Mexican Migration Statistics, 388,272 foreign-born persons registered in Mexico as temporary residents, regional visitors, and undocumented foreign born (many were in transit to the United States). Using a conservative approach, we can assume that these migrants could be receiving $200 per month in remittances for their living costs. Smuggling payments by undocumented migrants in Mexico: We use data on three variables: (i) the number of undocumented migrants in Mexico; (ii) a percentage of those migrants who hire coyotes, and (iii) the typical payments made, per migrant, to smugglers. According to the US Customs and Border Protection Agency, 478,280 Mexican individuals were apprehended/encountered at the US southern border in the period January–September 2021. To account for repeated border crossing attempts by the same individual, we assume that one-third of the single adults apprehended pay smuggling fees. This number does not include unaccompanied children and individuals in a family unit. Data on undocumented migrants in Mexico are from the Unidad de Política Migratoria, Registro e Identidad de Personas de la Secretaria de Gobierno de Mexico. For smuggling fees, we used data from the Migrant Border Crossing Study (which found that more than 70 percent of recent deportees in five border cities had used a coyote). The smuggling costs to cross from Mexico into the United States have been increasing, commensurate with the increase in staffing of US border control agents. According to Andreas (2011), smuggling costs were a few hundred dollars in 1994. The costs increased to over $3,000 as reported in the Mexican Migration Project (2019). Smuggling costs are differentiated by the nationality of the migrant. For example, Central Americans were charged about $6,000 to $7,000 to cross Mexico (Vogt 2018). The 2017 Survey of Migration at Mexico’s Southern Border (El Colef 2017) reported that the average coyote payments for migrants from Guatemala, Honduras, and El Salvador were about $10,700, $10,600, and $8,000, respectively. Due to COVID-19, costs have increased dramatically and now range up to $20,000 (Cooper 2021). 45 45 Migration and Development Brief 35 Remittance costs. According to the the cost of remittance transfers was 5.5 Remittance Prices Worldwide Database, percent in Q1 2021 (World Bank 2021a). In Mexico remained the least expensive receiving many smaller remittance corridors, however, market in the G-20, with remittance costs costs continue to be exorbitant. For example, recorded at 3.7 percent—for sending $200 the cost of sending money from Japan to to the country. For Latin America as a whole, Brazil or Peru is also expensive (figure 4.13). Figure 4.13 Cost of Sending Money to Latin America and the Caribbean Remained Stable A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 12 2020 Q1 2021 Q1 10 8 6 4 2 0 United United United United United Brazil to Brazil France United Japan States to States to States States to States to Paraguay to Peru to Haiti States to to Brazil El Salvador Ecuador to Peru Honduras Nicaragua Cuba Source: World Bank Remittance Prices Worldwide database. Note: Cost of sending $200 or equivalent. Remittance outlook. Due to expectations during FY21, the highest total for any fiscal of weaker growth in the United States, year in the United States (figure 4.14).22 Most remittances to Latin America and the of the migrants apprehended crossing the Caribbean are expected to grow at 4.4 southwest border were single adults, who are percent in 2022. Downside risks dominate, returned to Mexico if they are from Mexico or including the risk of the COVID-19 pan- from El Salvador, Guatemala, and Honduras. demic continuing, policy uncertainty and (If they are from other countries, they are geopolitical risks, increased restrictions on deported to those.) Since March 20, 2020, mobility, and a slowdown in global growth. the United States has applied the provision of the US Health Law, section 265 of Title 42, Migration trends. According to the US to deny entry to both migrants and asylum Customs and Border Protection, about 1.7 seekers. During FY2021, the US Border Patrol million apprehensions and encounters with mi- carried out more than 1 million expulsions. grants along the US-Mexico border occurred 46 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.14 Border Patrol Southwest Border Apprehensions/Inadmissibles, FY15–21 Encounter count 225,000 210,000 195,000 180,000 165,000 150,000 135,000 120,000 105,000 90,000 75,000 60,000 45,000 30,000 15,000 0 15 16 17 18 19 20 21 5 5 5 6 6 6 7 7 7 8 8 8 9 9 9 0 0 0 1 1 r-1 l-1 -1 r-1 l-1 -1 r-1 l-1 -1 r-1 l-1 -1 r-1 l-1 -1 r-2 l-2 -2 r-2 l-2 n- n- n- n- n- n- n- ct ct ct ct ct ct Ju Ju Ju Ju Ju Ju Ju Ap Ap Ap Ap Ap Ap Ap Ja Ja Ja Ja Ja Ja Ja O O O O O O Source: US Customs and Border Protection. About 30,000 Haitians tried to cross into the 17, 2023, for citizens of Somalia. The Latin United States during September 2022 but America region has faced an increase in the were apprehended. Of these, some 2,000 were number of asylum applications. For instance, deported to Haiti, 8,000 returned to Mexico, Mexico’s government received 90,314 asylum and 12,000 entered the United States with an applications during the first nine months of asylum application (Alden 2021). Several of 2021. The monthly average of asylum cases these Haitian migrants started out from Chile, increased from 108 to 10,000 in 2021, with where it is increasingly difficult to get a work countries of origin including Honduras, Haiti, permit due to changes in migration regulations and Cuba (Refugees International 2021). (Doña-Reveco 2021; Chile Atiende 2021). New migration routes in the region have The increased number of migrants from El emerged recently. Nearly 17,000 Haitians Salvador, Honduras, Guatemala, as well as re- who were living in Chile attempted to enter turnees to Mexico are also tied to the “Remain the United States and ended up applying in Mexico” policy of the United States. That pol- for asylum in Mexico. Many Venezuelans icy was terminated in February 2021. Mexico are also migrating from Peru to Chile due received a record number of asylum applica- to the economic and political situation in tions from different nationalities, totaling over Peru. The recent flow of more than 20,000 90,000 in 2021. Other developments in migra- undocumented migrants to Chile has cre- tion policies include: the automatic extension of ated anti-immigration sentiments.23 Temporary Permit Status for El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan; and its extension for 18 months through March 47 Migration and Development Brief 35 4.4 Remittances to the Middle East 2020, remittance inflows exceeded the sum of and North Africa Lifted by EU Re- other sources by more than $13 billion, under- scoring the importance of these receipts to both bound and Oil Prices the private and public sectors. Remittances Remittance trends. The LMICs of the Middle and ODA are likely to remain paramount for East and North Africa region accrued remit- the region in the medium term. For countries tances totaling $62 billion during 2021 with and territories in which remittances amount to growth registering 9.7 percent. For the region’s significant shares of GDP—Lebanon, the West developing economies, remittances have Bank and Gaza, and Jordan—the transmission long constituted the largest source of external of funds from large diasporas not only assists resource flows—among ODA, FDI, and port- in sustaining household consumption, but also folio equity and debt flows—making the region protects external accounts from excessive second only to South Asia in this respect (figure deterioration, bolsters reserve levels, and helps 4.15). As FDI and portfolio flows to the region to diminish the amount of external debt-cre- declined sharply during the global recession of ating flows needed to fund fiscal positions. Figure 4.15 Remittances Provide a Financial Lifeline in the Middle East and North Africa Region Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration ($ million) 75,000 65,000 Remittances 55,000 45,000 ODA 35,000 25,000 FDI 15,000 5,000 -5,000 Portfolio flows -15,000 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; MENA = Middle East and North Africa; ODA = official development assistance; e = estimate; f = forecast. Remittance receipts in the developing econo- affecting the GCC countries within the region.24 mies of the region have been favorable over the Remittance receipts in the Maghreb surged course of 2020 and the first half of 2021, sup- by 15.2 percent.25 Though GCC immigration ported by a return to growth of prominent host policy has tightened over recent years, coun- countries in the EU (notably France and Spain), tries such as Egypt and those of the Mashreq and the upsurge of global oil prices positively have benefitted from supplying more highly 48 RECOVERY — COVID-19 Crisis Through a Migration Len s skilled workers for public and private sector providing a source of foreign exchange, as positions.26 Though direct information is tourism revenues have collapsed during the difficult to come by, return migration from pandemic. Risks remain for a downward the Gulf may be driving the increase in remit- correction as several GCC countries are not tances recorded in countries such as Egypt.27 allowing unvaccinated expatriates to enter their countries. For Morocco, the second-larg- Egypt is by far the largest recipient of remit- est recipient among developing countries in tances among developing countries of the the region, despite the heavy concentration of region (54 percent of the total), garnering $33 expatriates in Europe, the United States leads billion during 2021, with stronger ties than the list of countries from which remittances are those of the Maghreb to the GCC and other sent (14 percent), followed by Saudi Arabia (12 Arab countries (figure 4.16). Remittances, percent) and France (10 percent). But return accounting for 8.4 percent of GDP, are of migration (especially from the GCC countries) paramount importance for the country in has increased during the COVID-19 crisis. Figure 4.16 Top Remittance Recipients in the Middle East and North Africa, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 33.3 34.8 16.7 9.3 8.4 8.0 7.4 6.6 5.1 3.6 2.9 2.2 1.8 1.3 1.5 1.1 0.7 0.1 0.3 0.1 p. co n an a sia p. q ti a n p. co sia ti ia q ia n p. no da no az Ira az Ira ou ou er er Re Re Re oc oc rd Re ni ni G G ba ba lg lg r jib jib Tu Tu or or Jo Jo b ic b A A ic d d D D ra ra Le Le m M M an an m A A la la k k Is t, t, Is an an yp yp n, n, tB tB Ira Eg Eg Ira es es W W Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. The EU remains the dominant destination Nevertheless—and in concert with the response for migrant workers from the Maghreb, with of migrant workers across the globe—remit- Morocco the largest provider of migrants in tance inflows to the Maghreb were resilient in absolute and relative terms. France and Spain 2020, advancing by 6.4 percent, abetted by are the key destinations, populated by 1.5 a drawdown of savings in addition to current million and 850,000 Moroccan expatriates, wages, to support families in origin countries respectively. Europe was hard hit by the as the COVID-19 Delta variant emerged. COVID-19 global recession during 2020, with GDP plummeting by 6.3 percent, on the back Signs of firming growth in the euro area are of a pandemic-induced falloff in exports, and now in view, with GDP gaining a robust 8.8 a dramatic decline in consumption and indus- percent (annualized) during Q2 2021, as trial production tied to restrictions on activity. stimulative fiscal outlays continue, and the EU will be pursuing disbursements from the “Next 49 Migration and Development Brief 35 Generation” Trust Fund.28 Euro area GDP is for Europe and the United States, the tenor of expected to register a solid 5 percent advance world oil markets, and, importantly, the ef- for the year, and still-robust 4 percent gains for fectiveness of combined sovereign and multi- 2022—developments of promise for additional lateral policy actions against the pandemic. near-term increases in flows from Maghreb expatriates. At the same time, a momentous A growth slowdown in high-income countries rise in global oil prices has served to buoy fiscal tied to a scaling back of fiscal stimulus mea- positions and prospectively support a rebound sures is the baseline view for 2022. In turn this in economic activity among GCC countries. suggests that remittance inflows to developing The average oil price more than doubled to countries in the Middle East and North Africa reach $82/bbl in October 2021 compared to will ease toward growth of 3.6 percent in the the same period of 2020. Global oil markets year from 9.7 percent in 2021, registering $64 are now anticipated to be undersupplied for billion. Softening of European activity the remainder of 2021 and the average crude will dampen inflows to the Maghreb to a price could hover at lofty levels into early 2022. degree, though the 2022 advance in remittanc- es is anticipated at a still-strong 5.8 percent. Remittances outlook. During the final months The easing of crude oil prices, tied to increased of 2021 and into 2022, risks for the region supply from OPEC+30 and the United States, remain substantial, as the Middle East and should constrain inflows to Egypt and the North Africa region is exceptionally vulnerable Mashreq toward a gain of 3 percent follow- to the spread of the Delta wave of COVID-19 ing the 8.6 percent performance of 2021. and caseloads have increased sharply in recent months; acquisition and logistics for the trans- Remittance costs. The cost of sending $200 port and distribution of vaccines to remote ar- in remittances to developing countries in the eas of the region present special challenges.29 region eased to an average of 6.3 percent Moreover, geopolitical and regional tensions in in Q1 2021, from 7.0 percent in Q1 2020. Lebanon, Libya, Syria, and Yemen persist, and The within-region (including GCC) cost of may act as a deterrent to needed inflows for sending remittances continues to stand these economies. Continued resilience in remit- well below that of sending transfers from tance flows to developing countries of the re- outside the region—3.5 percent vis-à-vis 9.7 gion in 2022 will hinge upon the path of global percent in the latest readings (figure 4.17). economic recovery, and risks facing prospects 50 RECOVERY — COVID-19 Crisis Through a Migration Len s Figure 4.17 Sending Money within the Middle East and North Africa Is Less Expensive than Sending Money from Outside A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 14 2020 Q1 2021 Q1 12 10 8 6 4 2 0 Saudi Kuwait to Jordan to Bahrain to United Arab Sweden Germany United Israel Australia Arabia to Egypt, Egypt, Egypt, Emirates to to to Kingdom to to to Egypt, Arab Rep. Arab Rep. Arab Rep. Egypt, Arab Lebanon Lebanon Lebanon Morocco Lebanon Arab Rep. Rep. Source: World Bank Remittance Prices Worldwide database. Note: Cost of sending $200 or equivalent. Migration trends. A “Nation Without Violators locations for transit migration. Transient and Campaign,” initiated in Saudi Arabia in 2018, irregular migration to Egypt is through its was intended to encourage illegal expats to borders with Sudan, Palestine, and Libya, with leave the country, without requiring payment destinations in Europe. Migrants from Western of penalties. This program has been replaced Africa and the Sahel transit through Morocco by new directives that the authorities believe and Tunisia toward Europe. These develop- put an end to kafala, the sponsorship system ments serve to boost remittance inflows to for expatriates. Under the earlier framework host economies in the Middle East and North it is estimated that over 1 million expatriates Africa, as migrants from third countries receive departed the country from February 2018 supporting remittances from their countries of through June 2020. A labor reform initiative origin. The Migration Policy Institute estimates introduced in March 2021 allows foreign that transit migrants to Europe may account workers in the private sector to seek another for 20–38 percent of the 65,000–120,000 employer if their current contract expires Sub-Saharan African citizens entering the without first obtaining the consent of the Maghreb countries yearly (MPI 2006). original employer. But the initiative excludes migrant workers not covered by the labor The Migration Policy Institute notes that law—a substantial group that encompasses, migration within North Africa in historical for example, 3.7 million domestic workers. context suggests that Algeria, Morocco, Tunisia, and Libya are also countries of des- North Africa and Egypt stand as prime tination for seasonal migratory flows from 51 Migration and Development Brief 35 Sub-Saharan Africa, involving persons without 4.5 Remittances to South Asia intention of moving on to Europe. Remittances Advanced in 2021 from origin countries of these migrants help to supplement incomes and bridge periods of Remittances trends. After displaying slack employment. Transit migration to Europe remarkable resilience through one of the through North Africa is likely to rise through sharpest economic downturns in host and 2022, amid the sharp decline in African living home countries in 2020, remittance in- standards tied to the pandemic, rising food flows to South Asia increased by 8 percent prices, and governments’ lack of fiscal space to $159 billion in 2021 (figure 4.18). to fund appropriate safety nets. This implies that remittances credited to the Maghreb In 2021 remittances were almost three times countries on behalf of transient migrants as large as FDI. Since 2008 the gap between “stuck” in these host nations will continue. remittances and all other financial flows combined has systematically widened in South Asia, making remittances the dominant source of foreign exchange for the region (figure 4.18). In 2021, for every $1 of FDI, South Asia received $2.9 of remittances. In the International Development Association (IDA) countries of South Asia, for every $1 of ODA in 2020, the region received be- tween $9.2 and $9.8 in remittances. Figure 4.18 Resource Flows to South Asia, 1990–2022 ($ million) 180,000 160,000 140,000 Remittances 120,000 100,000 80,000 FDI 60,000 40,000 20,000 ODA 0 -20,000 Portfolio flows -40,000 02 03 05 07 08 11 13 15 17 19 19 0 91 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 21 19 19 19 19 19 20 19 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. 52 RECOVERY — COVID-19 Crisis Through a Migration Len s In comparison with the overall economy of remittances was only 3 percent of GDP. (GDP), the importance of remittances varies Pakistan, Bangladesh, Nepal, and Sri Lanka across South Asian countries (figure 4.19). featured in the list of top 50 recipients of In 2021 remittance inflows were most critical remittance inflows in the world. The signifi- for Nepal, where they represent about 25 cance of remittances in their economies ranged percent of GDP. India was once again the top from about 13 percent for Pakistan to 6–8 recipient of remittances globally although percent of GDP for Bangladesh and Sri Lanka. in comparison to its economy, the share Figure 4.19 Top Remittance Recipients in South Asia, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 24.8 87.0 12.6 33.0 8.3 23.0 6.5 3.1 3.0 8.5 6.7 2.3 0.6 0.1 0.0 0.1 a an sh al ka an an s al an ka sh an a an s ve ve di di ep ep de de an an st st ut st st ut In di In di ki ni ki ni N N Bh Bh la la iL iL al al Pa Pa ha ha ng ng M M Sr Sr fg fg Ba Ba A A Sources: World Bank–KNOMAD staff estimates; World Development Indicators, and IMF Balance of Payments Statistics. Note: GDP = gross domestic product; e = estimate. Host and home country factors underpinned receipts in several South Asian countries. the surge in remittances to South Asia in 2021. The emergence of COVID-19’s Delta variant in Economic conditions in host countries were the summer of 2021 wrought large-scale agony also pivotal in facilitating remittance inflows. and death in South Asia, once again motivat- A more than doubling of crude oil prices ing an altruistic uptick in migrants’ remittances. to $82/bbl by October (y/y) aided in the In India, the severity of caseloads and deaths reopening of GCC economies, which employ from April to July of 2021 was astronomical by over half of South Asia’s migrants. While still global standards, with the cumulative caseload slow and uneven, the return of South Asian reaching 34 million persons and cumulative migrants to the Middle East contributed to deaths reported at 425,000.31 The reimposi- the growth of remittances in 2021. Rapid tion of mobility restrictions aided in directing economic recovery and generous stimulus more remittances to flow through formal checks in the United States also spurred money transfer channels and boost official growth in remittance outflows to South Asia, inflows. Alternatively, progress in vaccinations whose migrants in the United States are and the lifting of mobility restrictions in the mostly educated, high-wage earners.32 aftermath of the havoc wrought by the Delta The 2021 upsurge in remittance inflows, variant renewed the popularity of informal however, was not spread uniformly across means of money transfer, gnawing into official 53 Migration and Development Brief 35 South Asian countries. In India, the recovery remittances with growth at 26 percent, and in remittances is estimated to have reversed levels reaching $33 billion in 2021. In addition the flat trend of 2020 and advanced by 4.6 to the common drivers, the government’s percent in 2021, reaching $87 billion. Two proactive Pakistan Remittance Initiative factors were particularly instrumental: one, to support the transmission of remittances the tight nexus between energy prices and through formal channels was successful in remittances from the GCC, especially during attracting large inflows in 2021. Afghanistan’s Q3 2020 (figure 4.20); and two, the economic fragile economic and political situation recovery in the United States, which is the emerged as an unexpected prompt of remit- source of almost 20 percent of India’s remit- tance inflows into Pakistan in 2021 (box 4.2). tances.33 Pakistan had another year of record Figure 4.20 Oil Prices Have Affected Remittance Flows to India (Percent) ($/barrel) 80% India remittances growth (yoy growth) 140 Average of Brent, Dubai, 60% 120 and WTI, US$/barrel (RHS) 40% 100 20% 80 0% 60 -20% 40 -4,000 20 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019 Q3 2019 Q1 2020 Q3 2020 Q1 2021 Source: World Bank–KNOMAD staff. Note: yoy = year-on-year; WTI = West Texas Intermediate. In Bangladesh, although remittances rose the 2020 recovery in remittances was not above pre–COVID-19 and 2020 levels by sustained and inflows dropped 6.2 percent almost 6 percent to reach $23 billion in re- to their pre–COVID-19 level of $6.7 billion in sponse to the government’s tax cuts and other 2021, explained mostly by the popularity of incentives in 2021,34 a slowdown in growth is informal channels of money transfer. In Bhutan, distinct. In Nepal, remittances recovered to $8.5 remittances returned to the pre–COVID-19 billion in 2021, growing at 5 percent compared level of $58 million, marking a sharp decline with a minor drop in 2020. The rebound was of 31 percent relative to 2020, when altruism fueled by sharp economic growth in India and bolstered their jump of 47 percent. And remit- a decent pace of recovery in Malaysia, the tances in the Maldives too declined in 2021 two host destinations that account for about to their pre–COVID-19 level of $4 million. 40 percent of Nepal’s inflows. In Sri Lanka, 54 RECOVERY — COVID-19 Crisis Through a Migration Len s Box 4.2 Afghanistan Crisis Boosted housed around 60,000 Afghans, the numbers Remittance Inflows to Pakistan soared with the arrival of their relatives in recent months. Most of the Afghans leaving do Afghanistan’s fragile economic and political not intend to return to Afghanistan because of situation gave a special impetus to remittance the lack of security, fulfillment of basic needs, inflows in Pakistan. Following the breakdown and access to education and health care of official channels of money transfers to for their families. Their physical presence in Afghanistan, remittances intended for Afghan Pakistan enables them to receive remittances refugees in Pakistan, as well as for families in from their relative migrants abroad. Until dire stress in Afghanistan, flowed into Pakistan. conditions in Afghanistan stabilize, these According to one report, about 50,000 Afghans factors are likely to maintain a steady flow of crossed the border into Pakistan and Iran some remittances into Pakistan (Dawn, October 29, weeks before Pakistan temporarily closed 2021). In late October 2021, Pakistan imposed its borders (Schlein 2021). In the Gohati and several restrictions on outward remittances to Gandaf refugee camps alone, which once Afghanistan, especially in US dollar terms. Remittance costs remain high. Although South from Pakistan to Afghanistan have a rationale, Asia still has the lowest average remittance neither the absolute cost nor the cost increase costs of any world region, at 4.6 percent, the of sending money from Japan, Thailand, cost of remitting money to South Asia through Singapore, or Malaysia to India can be jus- official channels is high, and informal channels tified. Cost-reducing policies would create a remain popular. Figure 4.21 displays the wide win-win situation welcomed by migrants and variation in the fees/costs of sending $200 South Asian governments alike. Governments across countries, as well as to the same country in South Asia routinely face large current from different source countries. Barring a few account deficits that could be funded increas- exceptions, in most cases the costs increased ingly by remittances as more of them flow in 2021. While the high costs of sending money through official channels of money transfer. 55 Migration and Development Brief 35 Figure 4.21 The Costs of Sending Remittances to South Asia Varied Widely across Corridors A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 20 2020 Q1 2021 Q1 16 12 8 4 0 Singapore Singapore United United Malaysia Japan South Thailand Pakistan to Pakistan to to India to Kingdom Arab to India to India Africa to to India Bangladesh Afghanistan Bangladesh to Emirates to India Pakistan Bangladesh Source: World Bank Remittance Prices Worldwide database. Note: Cost of sending $200 or equivalent. The remittance outlook for South Asia in 2022 fewer skilled migrants in the United States. is uncertain. High-frequency data show signs of a slowdown in most countries. The pairing In India, remittances are projected to grow of forecasts of positive oil prices with moderate 3 percent in 2022 to $89.6 billion, reflecting GDP growth in the GCC countries paints a a drop in overall migrant stock, as a large lackluster picture of 2022 with ample scope proportion of returnees from the GCC await for slippages due to host-country-specific return. In Pakistan, remittances are likely to circumstances. There is a serious downside risk remain flat at the presently high levels in 2022, associated with any factor that translates into as the one-off effects of government incentives lower demand for South Asian migrants in the to attract them fade, though the Afghanistan GCC countries.35 In most host countries, despite factor will continue to sustain flows. In labor shortages, governments have been Bangladesh, slowing growth in remittances in slow in issuing work permits. Requirements of the first nine months of 2021 already suggests travel-related COVID-19 tests and quarantine downside risks for 2022, fueled mostly by the periods upon arrival at destination are also slow outmigration of return migrants, keeping discouraging migrants from returning to work. remittances flat in the year. In the other South On the positive side, forecasts of a still-robust Asian countries, as migrants continue to opt for recovery in the United States (5.2 percent greater use of unofficial channels for money growth in 2022 on the heels of 6 percent in transfer, the decline in recorded remittance 2021) offer good news for India—but will bene- inflows will accelerate in 2022 unless the GCC fit other South Asian countries less as they have countries enjoy a stronger than expected economic recovery. Due to the significant 56 RECOVERY — COVID-19 Crisis Through a Migration Len s uncertainty created by these offsetting effects, the state’s public sector wage bill, which the outlook for remittances in 2022 ranges accounts for approximately 60 percent of the from growth of 7 percent in the Maldives to government’s budget.37 Saudi Arabia started between 1 percent to 2 percent in Bhutan, charging firms a monthly fee of SRl 400 for Nepal, and Sri Lanka. Sri Lanka’s government each foreign worker they hired in 2018. Firms has recently announced an initiative to stem that employed an equal or greater number the leakage in official remittance channels: of Saudis than expatriates paid SRl 300. SL-Remit hopes to increase the annual inflow The fee was increased to SRl 500–600 per of remittances from $7 billion to $9 billion.  worker in 2019 and SRl 700–800 per worker in 2020.38 By raising the cost of migrant labor, these policies will discourage local employers COVID-19’s Blow to South Asian Mi- from hiring foreign workers in the future. gration and Looming Challenges Several looming challenges face less-skilled COVID-19 depleted the stock of South Asian South Asian migrants in the medium term. migrants and will affect remittances in the To prepare for a future with low oil prices, near term. The GCC countries alone employ GCC governments are considering a variety around 35 million or 10 percent of global of diversification policies that will require migrant workers, mostly from South Asia. In large numbers of skilled migrants. The United the wake of the initial waves of the pandemic, Arab Emirates recently announced green millions of migrants from South Asia returned visas that will offer more attractive terms home in 2020. As a large proportion were for skilled migrants.39 Saudi Arabia’s Vision unable to go back to work, in the near term, 2030 plan is expected to create 400,000 new the depleted stock of migrants will lead to jobs requiring mostly skilled workers. These declining remittance inflows. High airfares strategies provide an early warning to South and COVID-19 requirements (multiple pre- Asian governments to begin investing now in travel RT-PCR tests) are financially costly training their workforce for more skilled jobs for migrants from countries where testing is in the GCC countries in the medium term. expensive. Around 40,000 Bangladeshis who As at least 50 percent of Bangladesh’s 5 million came home on vacation could not return this migrants in the GCC countries are less-skilled year. Another hurdle to outmigration is the slow workers, the benefits of this win-win retooling pace of visa issuance in the GCC countries. strategy will be huge for the migrants and To cope with the fiscal crunch and prepare the government alike. Presently, the average for a future with lower oil prices, governments monthly remittance of a Bangladeshi migrant of the GCC countries are encouraging their who performs manual work is only $203 own citizens to replace migrants. Bahrain cut compared to $276 for a Pakistani, $396 for the number of flexi-permits from 47,000 in an Indian, $564 for a Filipino, and $533 for 2020 to 24,000 in 2021 and described the a Chinese.40 The hike in remittances from expatriate workforce benefiting from this more-skilled Bangladeshi migrants could be system as “surplus” manpower that the labor a windfall for Bangladesh and its migrants. market did not need.36 The Kuwaiti cabinet has tasked its Manpower Authority with getting another 100,000 citizens to work in the private sector within four years to reduce 57 Migration and Development Brief 35 4.6 Remittances to Sub-Saharan Afri- has been hit especially hard by the pandem- ca Regain Momentum ic-induced global downturn of 2020 and 2021, with GDP falling by 1.7 percent in 2020 (the Remittance trends. Several developments are worst performance on record) on the back of a supporting a return to growth in remittance 6.4 percent decline in South Africa. Moreover, inflows during 2021, estimated at 6.2 percent Africa is mired in a worsening debt crisis, to $45 billion. Aggregate remittance inflows relying on external support to meet financing to Sub-Saharan Africa declined by a sharp requirements. But the broader resilience of 14.1 percent during 2020, due to a $6.6 billion migrant-worker remittances in the face of (28 percent) falloff in officially recorded flows deterioration in economic conditions has been to Nigeria, which accounts for 50 percent of clearly demonstrated in the region (figure remittances to the region. Were Nigeria’s data 4.22). Strong performances in Ghana (5.9 to be discounted, as they clearly underestimate percent gain to $4.3 billion), Kenya (9.2 percent “actual” inflows to the country, African remit- advance to $3.1 billion), and Zimbabwe tance receipts would have displayed a modest (31.2 percent hike to $1.2 billion) provided 1.4 percent decline for the year. The region a foundation for regional receipts in 2020. Figure 4.22 Resource Flows to Sub-Saharan Africa, 1990–2022 ($ million) FDI 100,000 80,000 ODA 60,000 Remittances 40,000 20,000 0 Portfolio flows -20,000 02 03 05 07 08 11 13 15 17 19 19 0 19 1 19 3 19 5 19 7 20 9 96 20 e f 92 94 18 14 16 00 01 98 06 08 10 12 04 22 20 20 20 20 20 20 20 20 20 20 9 9 9 9 9 9 21 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank–KNOMAD staff estimates; World Development Indicators; IMF Balance of Payments Statistics. See appendix to the Migration and Development Brief 32 for forecasting methods (World Bank/KNOMAD 2020). Note: FDI = foreign direct investment; ODA = official development assistance; e = estimate; f = forecast. Nigeria continues to dominate remittance note, as the country recorded more than 15 inflows into Sub-Saharan Africa given the percent annual growth in receipts from 2015 exceptional size of the Nigerian migrant base through 2021, with a robust 19 percent gain (an estimated 800,000 persons) concentrated in the current year. For those countries where in two key host countries, the United States remittance inflows make up a substantial (375,000) and the United Kingdom (220,000) proportion of GDP—Lesotho, the Gambia, (figure 4.23). The case of Kenya is also of and the island states of Cabo Verde and 58 RECOVERY — COVID-19 Crisis Through a Migration Len s Comoros—continuing or special factors are in- to increase the amount of their personal volved. A downturn in revenues of the Southern transfers. The collapse of tourism revenues in Africa Customs Union41 has required migrants several island states with small populations has from smaller member states in southern Africa prompted increases in flows to home countries. Figure 4.23 Top Remittance Recipients in Sub-Saharan Africa, 2021 ($billion, 2021e) (Percentage of GDP, 2021e) 17.6 33.8 23.5 15.6 12.3 4.5 10.0 9.5 3.7 7.9 2.6 6.0 5.4 5.3 1.4 1.3 1.1 1.0 1.0 0.7 ia na a l e . a i a e e o de os ria l au na go ga al ga ep e w Th Th th ny nd ric er bw or M er ss ha ha To be ab .R ne ne so Ke f ig ga a, a, om Bi V A ba G G Li Le b em Se Se N bi bi a- o U h m C m ut ab am am ne ,D Zi Zi So C ui G G go G on C Sources: World Bank–KNOMAD staff estimates; IMF; World Bank’s World Development Indicators. Signs of a modest pickup in officially recorded Remittance costs. Sub-Saharan Africa inflows to Nigeria support a positive regional remains the costliest region to send remit- forecast. Economic recovery in Europe and tances to: costs averaged 8 percent during the United States in 2021—just as most Sub- Q1 2021, down from 8.9 percent from Q1 Saharan African counties suffered significant 2020. The cost of remitting from the United debt difficulties and anemic growth—should States to Kenya amounts to 6.7 percent, and enable and incentivize increased economic from France to Cameroon it is 3.5 percent and altruistic remittance flows from the large (figure 4.24). Though intraregional migrants African diaspora. The number of extreme poor in Africa comprise more than 70 percent in the region is likely to have increased by more of all international migration in the region, than 32 million from 2020 through mid-2021, intraregional remittance costs are quite high and economic growth is expected to be 3.7 due to small quantities of formal flows and percent for the year—the slowest among de- utilization of black-market exchange rates. veloping regions in 2021 (World Bank 2021c). For example, the fee for sending $200 in remittances from Tanzania to neighboring Uganda would cost the Ugandan migrant 23 percent (up 100 basis points in the year). 59 Migration and Development Brief 35 Figure 4.24 The Costs of Sending Remittances to Sub-Saharan African Countries Varied Widely across Corridors A. Five Least Expensive Corridors B. Five Most Expensive Corridors (Percent) 25 23.0 2020 Q1 2021 Q1 22.2 21.0 19.8 20 19.0 19.019.1 17.717.9 16.6 15 10 4.4 4.2 5 3.8 3.5 3.7 3.3 3.5 3.4 2.4 2.6 0 Côte Saudi Senegal France to United Tanzania Tanzania South South Tanzania d’Ivoire Arabia to to Mali Cameroon States to to Rwanda to Kenya Africa to Africa to to to Mali Sudan Liberia Botswana Angola Uganda Source: World Bank Remittance Prices Worldwide database. Note: Cost of sending $200 or equivalent. The COVID-19 Delta variant stands as a Ethiopia, Kenya, Nigeria, Mozambique, substantial risk to cross-border mobility of Uganda, and Zimbabwe. The situation people and flow of remittances. Africa is now remains urgent in the absence of sufficient being rapidly infected with the Delta variant quantities of vaccine facilities, human capital, of COVID-19. The original COVID-19 virus and logistics capacity for needed rollouts. initially was less transmittable in Sub-Saharan Africa due in large part to the relative youth Remittance outlook. Despite easing economic of the population (with a median age of 18 growth in host regions of the world, and con- years). However, the early spread of the tinued uncertainty regarding the course of the Delta variant of COVID-19 was first noted pandemic, remittance receipts in Sub-Saharan in South Africa, then moved to East Africa, Africa are projected to accelerate in 2022, on after which caseloads increased dramatically. the back of a gradual movement toward the A moving average of daily new cases sky- use of official channels for inflows to Nigeria. rocketed from 9,000 in May 2021 to 38,000 Following the country’s substantial adjustment in July and August. A total of 8.5 million of 2020, there are now signs that recent policy recorded infections and 250,000 deaths changes may be achieving some traction. For have been reported in Sub-Saharan Africa example, an increase in official remittances of since the onset of the pandemic. South Africa 2.5 percent in the first half of 2021 contrasted is the most severely affected, experiencing with the same period of 2020 (figure 4.25).42 An an increase of 750,000 cases in September anticipated 7.3 percent increase in remittances 2021 to reach an aggregate caseload of 2.9 during 2022 would carry Nigerian receipts million. Other countries now affected include to $19 billion, still well below the average $23 billion that characterized the immediate 60 RECOVERY — COVID-19 Crisis Through a Migration Len s pre-pandemic period. Inflows to the remainder of 4.4 percent, bringing African receipts to $48 of the region are anticipated to maintain fa- billion for the year, an increase of 5.5 percent. vorable growth, though at a more muted pace Figure 4.25 Quarterly Remittance Inflows, Nigeria ($million) 7,000 6,034 6,002 5,916 5,857 5,691 6,000 4,995 5,000 4,342 4,146 3,949 4,000 3,421 3,000 2,000 1,000 0 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 Source: Central Bank of Nigeria. Risks in 2022 look relatively high—although staples—key imports for the region (maize, 28 several developments may offer potential percent; wheat, 8 percent)—are amplifying to support flows. The uncertain path of the the need for remittance support as household pandemic, slowing host-country growth, and budgets come under increasing strain. intraregional conflict amplify the risk profile. But developments in commodity markets may Migration trends. Though changes in legis- have two influences on remittance receipts in lation in the United States and the EU have late 2021 and into 2022: (i) further support for tightened requirements for immigration, altruistic migrant flows to households, given movement of African nationals to key host high food prices, amid the general concern countries has continued at a quick pace. for food security in Africa; and (ii) a revival Between 2010 and 2018, the African-born of intraregional remittance flows, from the population in the United States surged by large stock of migrants from the rest of Africa 52 percent to more than 2 million, versus 12 residing in countries that will benefit from percent growth for the total foreign-born improved terms of trade.43 The doubling of population. Immigrants to the United States global crude oil prices and increases in several have included refugees from conflict-ridden metals (including copper, 48 percent over countries, and highly skilled workers and the year to October) are serving to improve students from Ghana, Kenya, Nigeria, and fiscal revenues and—prospectively–growth for South Africa. Asylum applicants have driven countries such as Nigeria, South Africa, Ghana, the flow of migrants to Europe, amounting to 1 Côte d’Ivoire, and Uganda. Alternatively, million between 2010 and 2018. Migrants from the substantial increase in the prices of food East Africa constitute 27 percent (9.8 million) 61 Migration and Development Brief 35 of all migrants from Sub-Saharan Africa, with natural gas, the IOM noted in August that a majority residing in other African countries support will need to be continued for more such as Ethiopia, Kenya, Sudan, and Uganda. than 800,000 internally displaced persons Migration out of the region is oriented toward (IOM 2021b). Domestic conflict in Ethiopia several EU countries and the GCC countries. has resulted in 5.2 million displaced persons within the country, with refugees spilling over In the past year, East Africa has become a into Sudan. The UNHCR is requesting $165 locus for internally displaced persons and million to fund support for 96,000 Eritrean cross-border refugees, grounded in politi- refugees, 650,000 internally displaced persons co-military developments in Mozambique and in the Tigray province of Ethiopia, in addition Ethiopia. Against the background of an armed to 120,000 Ethiopian refugees in Sudan. insurgency in the Cabo Delgado province of Mozambique, with attacks centered on new infrastructure investment related to liquefied 62 RECOVERY — COVID-19 Crisis Through a Migration Len s References Alden, Edward. 2021. “Why Are Haitian Mi- Dinarte, Lelys, David Jaume, Eduardo Me- grants Gathering at the U.S. Border?” dina-Cortina, and Hernan Winkler. 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New York: United Nations. 65 Migration and Development Brief 35 Endnotes 1  spring 2021, remittance receipts for LMICs In percent greater declines in earnings and were anticipated to advance by 2.1 percent fourfold greater prevalence of food insecurity to reach $553 billion in the year (World among migrant households since March. Bank/KNOMAD 2021). In 2021, Romania was reclassified as a middle-income country 5 T  he G-20 leaders meeting in Rome from a high-income country, which accounts also called for preventing irregu- for the higher figure for remittances ($548 lar migration flows and the smug- billion) for 2020 in this Brief, compared gling of migrants (G-20 2021). to $540 billion reported in Brief 34. 6 I  n October 2021, remittances to Bangladesh 2  emittances may also be viewed as a R were down 21.7 percent year-on-year. complement to FDI, which tends to aug- 7 I  n the case of Egypt, return migration seems ment private domestic investment, and to have increased, which could also lead to a to ODA, which can assist in underpinning temporary increase in remittance flows due public spending and capital outlays . to migrants coming home with their savings. Moreover, all such flows serve as a source of non-debt-creating finance for fiscal and 8  n October 2021, IMF (2021) projected the I external funding needs, diminishing the call global economy to grow by 5.9 percent on nonconcessional sources of credit and so in 2021 and 4.9 percent in 2022 (0.1 per- easing the pressure on low-income coun- centage point lower for 2021 than in the tries’ debt and debt-servicing obligations. July 2021 World Economic Outlook (WEO) Update). Beyond 2022 global growth was 3 China appears to be the second-largest recip- projected to moderate to about 3.3 percent. ient of remittances after India, but its official remittance data are not consistently reported. 9 A  SEAN-5 refers to the five countries of the Association of Southeast Asian 4  large number of households surveyed in A Nations—Indonesia, Malaysia, the Q2-2020 reported receiving lower remittanc- Philippines, Singapore, and Thailand. es since the start of COVID-19 in Mexico (35 percent) and the Dominican Republic (54 10  he global increase in confirmed caseloads T percent) even as the central banks recorded over the month to October 20, 2021, is higher inflows (10 percent and 18 percent re- beginning to ease, but carried total con- spectively). This is consistent with a hypothesis firmed cases to 242 million. This number that flows shifted from informal (unrecorded) includes a 3 million jump in the United channels to recorded channels although the States; more than 1 million in the United extent of the impact of COVID-19 on informal Kingdom; and 400,000 to 800,000 in flows is unclear. In Somalia, 94 percent of Brazil, Iran, and Turkey. Hospitalizations households reported a decrease in remittance doubled in the United States during August receipts in July 2020, but the central bank (Johns Hopkins COVID-19 Resource reported an increase of 7 percent (year-on- Center and Our World in Data).. year) during the same month. Separately, 11 J  apan, China, and the ASEAN countries based on phone surveys of households in are experiencing a stretch weak economic Bangladesh and Nepal, conducted in April– activity tied to a resurgence of COVID-19 May 2020, Barker et al. (2020) reported 25 caseloads and the implementation of 66 RECOVERY — COVID-19 Crisis Through a Migration Len s strong restrictions, notably in China. 18  he National Chamber of Commerce and T Industry of Malaysia reported that the plan- 12  y the end of 2020, the total number of B tation sector requires 70,000 foreign work- forcibly displaced persons was 82.4 million ers, the construction sector needs 200,000, (UNHCR 2020). According to UNHCR, the furniture industry is short of 30,000 Pakistan and Iran hosted 1.5 million, and workers, and the manufacturing and rub- 780,000 Afghans were hosted by these ber-glove industries need 50,000 workers. neighboring countries in 2020. According to the BBC, an estimated 3.5 million Afghans 19  ttps://data.bls.gov/pdq/ h are internally displaced within the country. SurveyOutputServlet. 13  o complement the Global Average and T 20  n 2021, FATF stated that Mexico has I Global Weighted Averages described taken multiple measures to improve above, the World Bank introduced the compliance against money laun- SmaRT indicator in Q2 2016, which aims to dering and terrorist financing. reflect the cost that a savvy consumer with access to sufficiently complete information 21 D  uring 2020 there were 27,200 re- could pay to transfer remittances in each turnees from the United States to corridor. In Q1 2021, the Global SmaRT Guatemala and 26,149 deportees Average was recorded at 4 percent. from Mexico to Guatemala. 14  s of mid-November 2021, less than A 22  ccording to the American Immigration A three weeks after its launch, eNaira wal- Council, since migrants are attempting to let was reportedly downloaded 566,000 cross the border several times, the number times in 160 countries. Before Nigeria, of people apprehended after crossing China and Sweden are among the nota- the border is only 24 percent higher. ble countries with their own CBDCs. 23  ccording to the Ministry of Interior, A 15  or an interesting discussion of digi- F about 23,673 migrants crossed the tal currencies, see Prasad (2021). northern border, an increase of 7,000 over last year (France 24 2021). 16  here were about 1.7 million documented T migrant workers in Malaysia during 2020 24 L  ow- and middle-income economies in according to the Human Resource Ministry, the broader Middle East and North Africa while the undocumented count is anywhere region (which also includes the GCC econo- between 2 and 4 million workers according mies) are Algeria, Djibouti, Egypt, Iran, Iraq, to IOM. As of June 2021, about 180,000 Jordan, Lebanon, Libya, Morocco, Tunisia, refugees were registered with the UNHCR, the West Bank and Gaza, and Yemen. mostly from Myanmar. If found outside 25  Algeria, Morocco, and Tunisia. official refugee camps, refugees are consid- ered by local authorities as “undocumented” 26  Jordan, Lebanon, and Syria. foreigners and are treated as such. 27 N  et emigration for Egypt (the difference 17  ne state, Selangor, has approved the same O between leaving and arriving persons vaccine to be purchased by companies for per 1,000 population) has halved from their employees, effectively allowing them a recent peak of -.68 in 2015 to -.34 in to jump the queue while nationals must 2020, possibly indicative of substan- register and be notified of an appointment. tial return migration from the GCC (CIA Factbook, December 2020). 67 Migration and Development Brief 35 28  he trust fund was established to provide T 35  s an example, Saudi Arabia granted A the EU with the necessary means to me- 12 percent fewer work visas in Q1 2021 diate challenges posed by the COVID-19 relative to the same period in 2020, pandemic, and to support a revitalization whereas Oman reported a 15 percent of growth in the wake of the pandemic. year-on-year decline of Bangladeshi The European Commission is authorized workers in Q1 2021. Additionally, there to borrow funds up to €750 billion, and are other frictions in migrant labor flows, all Member States ratified the decision like establishing rapid PCR testing in the by May 31, 2021. The fund offers some airports to comply with new procedures in promise for stronger growth into the me- host countries (the United Arab Emirates dium term and support for remittances. is an example) (World Bank 2021b). 29 M  any countries reimposed partial lock- 36  ulf Daily News, October 26, 2021. G downs in late 2020 but following a decline in caseloads in early 2021, infections and 37  audi Gazette, October 4, 2021. S deaths are again on the rise in the Maghreb, 38  audi Gazette, September 15, 2021 S Mashreq, and GCC countries. Examples include Morocco with an increase of 39  aily Star, October 29, 2021. D 110,000 cases in September 2021 to a total 40  aily Star, October 29, 2021. D caseload of 925,000; Jordan’s increase of 25,000 to 815,000; and a rise in the United 41 T  he Southern Africa Customs Union is Arab Emirates of 25,000 to 735,000. comprised of South Africa, Botswana, Eswatini, Lesotho, and Namibia. Among 30  PEC+ is an amalgamation of the O agreements underlying the customs union is Organization of the Petroleum Exporting a sharing of revenues across countries, the Countries (OPEC) and 10 other oil-exporting pool of which (generated in large by South nations such as Russia and Kazakhstan. Arica) has fallen in the past years, due to 31  ohns Hopkins Resource Center, J global recession and the collapse of trade. October 19, 2021. 42 T  he new “Naira-4-Dollar” policy of the 32  he March 2021 American Rescue T Central Bank of Nigeria, launched in March Plan ($1,844 billion, about 8.8 percent 2021, offers an N 5 reward for every US of 2020 GDP); the December 2020 dollar transferred through the banking Consolidated Appropriations Act ($868 system—a policy aimed at shoring up billion, about 4.1 percent of GDP); and foreign exchange liquidity in the financial the CARES Act ($2.3 trillion, 11 per- system and encouraging Nigerians to use cent of GDP) are some examples. official channels. Moreover, the introduction of the e-naira has attracted substantial 33  S real GDP growth slowed considerably U attention from financial markets recently. from a robust 6.7 percent annualized pace in the second quarter of 2021 to 2 percent 43 I  n Sub-Saharan Africa, intraregional during the third quarter, as shortages immigration well surpasses international of durable goods, notably automobiles, migration—70 percent of immigration in yielded falloff in consumer spending. Africa is from within the region, with South Africa, Côte d’Ivoire, Uganda, Nigeria, and 34  ee Migration and Development Brief 34 S Ethiopia the main destinations (MPI 2019). for a good discussion of these factors. 68 RECOVERY — COVID-19 Crisis Through a Migration Len s 69