Remittance inflow slumped by about $2 billion in 2016 from a year earlier despite a 35 percent increase in migrant outflow during the period.
The low oil price on the global market and rising preference for hundi by expatriate Bangladeshis have been blamed for the slide in remittance.
In 2016, remittance inflow stood at $13.61 billion -- the lowest in five years, according to central bank statistics. The amount is lower than 2015's receipts by 11.13 percent.
Migrant outflow, which, in theory, is positively correlated to remittance, was two lakh more last year.
In 2016, 749,249 migrant workers went abroad for jobs in contrast to 555,881 in 2015, according to the Bureau of Manpower, Employment and Training.
“Though remittance inflow declined it is still quite good,” Finance Minister AMA Muhith told The Daily Star.
Remittance fell mainly due to the decrease in oil price, he said.
“But still, the slide in remittance is not a challenge, as the number of expatriates returning home is not increasing. They are staying back where they are.”
“In Saudi Arabia, the overall salary fell but the expatriates still feel they are well off there. They are remaining there,” Muhith added.
Saudi Arabia accounted for the highest incremental share in manpower export figure for 2016, while a significant number of the workers went to Oman, Qatar and Malaysia.
There is anecdotal evidence that the real income of migrants is waning in the Gulf Cooperation Council countries: prices of staple goods and public services have increased, according to a World Bank report released in October.
Saudi construction firms have been hit hard due to the lower oil prices, which have curbed and, in some cases, delayed government spending on major infrastructure projects. If the ongoing fiscal consolidation in the GCC countries is sharper than expected, remittance flows could slow sharply, the WB said. But Zahid Hussain, lead economist of the World Bank's Dhaka office, said the decline in remittance is not just because of the depressing effects of low oil prices on incomes and employment in the oil exporting countries.
Since July, remittances have declined very significantly from the US and the UK as well, which together accounted for 22 percent of total remittances received in fiscal 2015-16. More significantly, a decline in remittances from the US and UK accounted for nearly 46 percent of the total decline in remittances during the first five months of fiscal 2016-17 from a year earlier.
“These declines cannot at all be explained by the oil price factor,” Hussain said, adding that four other factors contributed to the remittance decline.
Transferring funds across countries through formal channels have become cumbersome after the recent spate of terrorist attacks in some major cities around the world. Second, the premium for the informal market exchange rate has widened steadily since January 2015 from almost zero to nearly Tk 5 per dollar.
“This has also strengthened the incentive for remitting through informal channels,” Hussain.
Third, since the UK referendum vote in favour of Brexit, the taka has appreciated against the pound by about 17.6 percent and the appreciation was sharpest during July to mid-October. “This discouraged remittance from migrants who earn their income in pounds.”
And fourth, the US election result does not bode well for income and employment prospects of migrants in the US, including Bangladeshi legal and illegal migrants.
The rising uncertainties with respect to the extent of the tightening of US policies against migrants may be discouraging Bangladeshis in the US to part with their savings so that they are not caught unprepared to face any unforeseen disruption in employment and earnings, Hussain added.