Amid a backdrop of weak global growth, remittances to developing nations are expected to increase at weak pace in 2016, according to a new report by World Bank.
The report, titled Migration and Development: A Role for the World Bank Group, said that remittances to low and middle income countries are expected to increase by 0.8% to $442bn this year.
The study found that modest recovery in 2016 is primarily driven by rise in remittances sent to Latin America and the Caribbean.
Low oil prices continued to be a factor in reduced remittance flows from Russia and the Gulf Cooperation Council countries. Additionaly, structural factors also played a role in decreasing remittances growth.
Over the next two years, the global growth of remittances to developing countries is projected to remain modest at about 3.5%. Developing regions other than Latin America and the Caribbean are projected to have growth of 2% or lower, it added.
The global average cost of sending $200 remained at 7.6% in the second quarter of 2016. Average costs have dropped from 9.8% in 2008.
World Bank global indicators group director Augusto Lopez-Claros said: “Remittances continue to be an important component of the global economy, surpassing international aid. However this ‘new normal’ of weak growth in remittances could present challenges for millions of families that rely heavily on these flows. This, in turn, can seriously impact the economies of many countries around the world bringing on a new set of challenges to economic growth.”
