Remittance growth beats bleak forecast

Rejaul Karim Byron

Remittance growth stood at 21.23 percent in the first four months of the current fiscal year, despite bleak forecasts by the World Bank.

The July to October period measured the remittance inflow at $3.61 billion, which was $2.98 billion in the same period last year.

Bangladesh recorded $911.20 million in remittance in October, up from $887.92 million a month ago, according to central bank data. Remittance crossed the $900 million mark for the third time in 2009. The figure was $935.15 million in August and $919.10 million in June.

Due to the large remittance inflow, the foreign currency reserve is increasing. It was recorded at $9.56 billion yesterday.

The foreign exchange reserve that was $5.82 billion in June rose to $7.74 billion in July. In August, the reserve crossed $9 billion.

The WB projected Bangladesh will record remittance growth at 12.3 percent at best and the least at 8.4 percent for the current fiscal year.

The WB also said the outflow of migrant workers in Bangladesh has slowed significantly. In July, the migrant outflow dropped by 57 percent compared to the same month last year. The impact of global recession became evident in the second half of fiscal 2009, when the outflow of migrant workers declined by 47 percent.

The number of migrant workers finding employment abroad has declined by 33 percent in fiscal 2009 -- a total of 650,000 migrant workers got a job abroad this year, compared to 969,000 last year.

The report also said the economic outlook in the Gulf Cooperation Council (GCC) countries will be decisive for Bangladesh. The GCC countries together accounted for 63 percent of total flows in fiscal 2009. Saudi Arabia was by far the largest source of remittance ($2.9 billion), followed by UAE ($1.8 billion).

The outflow of Bangladeshi workers to GCC member countries was affected by the global economic crisis. In fiscal 2009, about 4,61,000 workers immigrated to the gulf, compared to 6,57,000 in the last year -- recording a 30 percent drop.

However, the report added the recent increase in oil prices to around $70 a barrel should reduce the risk of a fall in remittance from Bangladeshi workers in GCC countries.

The WB report said a regression exercise revealed the key determinants of changes in the level of remittance inflow are the number of workers finding employment abroad every year, the oil price, the exchange rate and the GDP growth rate.

The results show: an additional migrant worker brings in $816 in remittances annually, a dollar increase in oil prices increases annual remittances by nearly $15 million, depreciation of the exchange rate by one taka increases annual remittance by $18 million and remittances are higher in times of low economic growth.

A Bangladesh Bank official said the number of outbound migrant workers dropped in the current fiscal year but a large number of poor expatriate Bangladeshis are still staying abroad and sending remittance home.