Bangladesh became an exception among top remittance recipient countries amid the Covid-19 pandemic as expats sent $19.8 billion to the country in 2020, an 8% increase on the previous year's. The country's remittance inflow was $18.4 billion in 2019.
The novel coronavirus pandemic has had an enormous impact on jobs and wages in many sectors of the global economy, and the crisis negatively influenced the flow of migrant remittances across the globe.
Besides Bangladesh, Mexico and Pakistan also registered a remittance inflow increase of 9% and 4% respectively in 2020 compared to 2019, reveals the latest report titled "Covid-19 and Migrant Remittances: A Hidden Crisis Looming?" by the Economist Intelligence Unit (EIU).
The three countries are among the world's largest recipients of remittance, it mentions, adding that the increases were no doubt the result, at least in part, of a shared desire among migrants from these countries to support loved ones back home during an exceptional economic crisis.
In Bangladesh and Pakistan, 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, read the report published on Wednesday.
The introduction of new remittance tax incentives by the authorities in 2019 by Bangladesh and in 2020 by Pakistan – could also have boosted flows, but those effects may well be temporary, the London based global business intelligence pointed out.
The World Bank estimated that global remittances fell by 7% in 2020, surpassing the 5% decline seen during the global financial crisis in 2009.
The EIU also warns that the one-off nature of these factors increases the risk of a further 7% remittances falling in 2021 owing to the pandemic's lingering effects on the global economy.
This represents worrying news for developing economies, which already face significant challenges amid the pandemic.
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, which was 40% and 29% respectively in 2019, the EIU said.
Three other large recipients in Asia – China, India and Vietnam – saw their remittance inflows fall by 13%, 9% and 8% respectively in 2020, compared to 2019.
China relies on remittances for only a small share of its current-account credits (a mere 2% in 2019). The country's current account has long been in surplus, and goods exports remained fairly resilient amid the pandemic-induced trade disruptions of 2020.
Vietnam faces a similar situation, as remittances accounted for just 6% of its current-account credits in 2019.
India faces slightly more pressure, although it is far from being the most vulnerable country. Remittances accounted for a significant share of current-account credits in India – 13% in 2019.