Rise in Remittance in 2020: Bangladesh one of three large recipients
Bangladesh became one of the three large remittance-recipient countries that registered a rise in inward remittance last year, according to a new report of the Economist Intelligence Unit.
Last year, Bangladesh received about $19.8 billion in remittance compared to $18.4 billion it received the year before, said the report.
The other two countries that saw rise in inward remittance last year are Mexico ($40.5 billion) and Pakistan ($24.1 billion). Their inward remittance in 2019 was $39 billion and $22.2 billion respectively, added the report which also used World Bank data.
With the figure of $19.8 billion, Bangladesh is the eighth highest recipient of remittance among the 10 countries listed by the recently published EIU report -- "Covid-19 and Migrant Remittances: A Hidden Crisis Looming?"
Other large remittance recipients in the list -- India, China, the Philippines, Egypt, Nigeria, Vietnam, and Ukraine -- saw decline in inward remittance last year.
Globally, inward remittance declined by $50.5 billion last year with countries receiving $666.2 billion compared to $716.7 billion the year before, the report said.
"The World Bank estimates that global remittances fell by 7 percent in 2020, surpassing the 5 percent decline seen during the global financial crisis in 2009."
A further 7 percent drop in remittances is expected in 2021, owing to the pandemic's lingering effects on the global economy, the report added.
The EIU study mentioned that in Pakistan and Bangladesh, increased remittance inflows were likely tied to factors unique to 2020. These included the repatriation of overseas savings by nationals returning home after losing their jobs; this trend was especially notable in the Gulf economies, which suffered greatly amid the crash in oil prices and tourism.
The headline rise in remittances was probably also prompted by the shift in flows to formal channels, as travel restrictions complicated the informal transfer of remittances across borders -- effectively meaning that the 2020 rise may be partially explained by an accounting change.
The introduction of new remittance tax incentives by the authorities -- in 2020 by Pakistan and in 2019 by Bangladesh -- could also have boosted flows, but those effects may well be temporary, the report said.
The one-off nature of these factors increases the risk of remittances falling this year. This could be problematic for Pakistan and Bangladesh, which both ran pre-Covid current-account deficits and rely on remittances for a sizeable share of current-account credits.
The report said a sharp depreciation of the peso at the onset of the pandemic encouraged the flow of remittances to Mexico from the US, as the value of remittances in local currency was artificially increased.
Access to stimulus payments in the US is also likely to have supported these flows, even as unemployment rose while the pandemic progressed (more than 90 percent of Mexican migrants are based in the US, and many have access to social protection via resident status or a work permit).
The report said the pandemic has had an enormous impact on international flows of migrant remittances, which represent a significant source of economic support for many poor countries.
"Apart from a few exceptional cases, most remittance-receiving countries are in a very difficult position," it said.
Many registered a steep fall in remittances in 2020 compared with 2019, such as the Kyrgyz Republic, which suffered a 22 percent drop, the report added.