Five Asian countries – Bangladesh, India, Pakistan, Sri Lanka and the Philippines – are under a threat of losing a sizeable amount of remittance earnings this year due to the Covid pandemic. Among them, Bangladesh may, however, face a lower risk.
Fitch Ratings Inc, a US-based credit rating agency, forecasts that the annual remittance inflow for these nations may drop by 12% on an average. Earlier, the World Bank and the Asian Development Bank projected a 20% fall.
Experts and industry people say a large number of expats got stuck in their own countries amid pandemic-induced lockdowns while many others, who stayed in employing countries, did not get salaries in the past several months, causing a negative forecast on remittance earnings.
The Fitch Ratings' report styled "APAC Remittances and the Coronavirus Shock" released on September 8 reported that despite recovery in the recent months, the pandemic and subsequent fallouts on the oil market are seriously affecting migrant workers and remittance inflows.
According to the Bangladesh Bank data, the country's remittance earnings declined by 2.65% to $4.43 billion in this year's second quarter. But it bounced back in July and August with about 50% growth year-on-year.
The first half of the running year saw a 1.43% drop to $8.80 billion in contrast to $8.92 billion it earned last year.
Shameem Ahmed Chowdhury Noman, secretary general at Bangladesh Association of International Recruiting Agencies (Baira), said many expatriates had become jobless and did not get salaries in the last few months. The situation is getting normal but not risk-free yet as many counties are under a threat of a second wave of Covid.
The previous month of every Eid sees a record high in remittance inflow, and July this year was no alternative. In August, growth was a bit slower. But if this growth trend continues for the next three months, the country will enjoy a positive growth at the end of the year, he added.
However, the industry leader warned that many countries might shut doors on Bangladesh if it does not strictly follow the health guidelines to avert the virus infection.
Some countries may reopen by late September, Noman said, adding, "If everyone follows the health guidelines, the pandemic situation will improve in the next few months. Otherwise, the country might be facing a hard reality in remittance earnings."
Md Shahadat Hossain, senior vice-president at Baira, said over 1 crore Bangladeshis work across the world, most of whom are in Middle Eastern countries. When Covid-19 hit these countries, lockdowns were imposed for a few months. But the situation is getting normal day by day.
About 100,000 expatriates, who came back to Bangladesh to spend holidays, are stuck in the country due to the Covid while another 100,000 aspirants cannot go abroad.
Dr Ahsan H Mansur, Policy Research Institute's executive director, echoed the Baira leaders.
He said the overall remittance inflow would reduce substantially and that the effect will sustain for several years due to a drop in the rate of manpower export.
Dismissing the possibility of a rapid turnaround in the country's labour market abroad, the economist said the destination of most Bangladeshi expatriates is the Middle East, but the region's economy is the worst globally at present.
The global economy has shown a sign of some improvement, but the Middle East's economy is expected to be in a prolonged recession, thanks to lower demand and dropped oil prices, he said, adding that Bangladesh must wait for the recovery of the Middle East to boost manpower export.
Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said the pandemic led to the number new expatriates falling even below one-fourth compared to that in other years. That is why the remittance growth will dry up in the near future.
The economist also said the global economic recovery is not sufficient to boost the manpower export if the Covid infection does not reduce.
"Foreign countries will not trust our testing system due to some previous scams," he said, urging the government to introduce a holistic policy through maintaining good governance to restore foreign employers' confidence.
The Fitch Ratings examined remittance flows in the first half of 2020 and made the projection for the coming quarters in five countries in the Asia region – Pakistan (B-/Stable), Bangladesh (BB-/Stable), Sri Lanka (B-/Negative), India (BBB-/Negative) and the Philippines (BBB/Stable).
The rating, BB-, mentions an obligor is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitments.