Remittance flexibility is the lifeblood of developing economies

Poor countries have a long way to go in securing vaccine supplies and putting the economy on the road to recovery.End of discussion Debt relief with Preferential finance By the way, there is one very simple thing that rich countries can help them: Constantly welcoming immigrants who send money home.

In some small economies, remittances account for more than a quarter of GDP.For low- and middle-income countries other than China, they have now become More important source Funds exceed the sum of foreign direct investment and official assistance, supporting the weak social security system. During the pandemic, they have proven to be the lifeblood of the economy.

Their resilience is surprising. Last April, the World Bank predicted that remittances to low- and middle-income countries would fall by one-fifth by 2020. to sum up They are only 1.6% lower than 2019, to 540 billion US dollars. Despite the greater danger, greater health risks, and strong opposition from public opinion, immigrants still do their best to send home.

According to World Bank economist Dilip Ratha, fiscal stimulus is one of the main reasons why remittances remain much better than expected. This is particularly evident in Latin America and the Caribbean. Driven by the economic recovery in the United States, inflows from Latin America have increased by 6.5%.

Many immigrants are unable to claim benefits in the United States, but policies and measures to keep businesses operating help them continue to make money. Ratha said that in healthcare and other frontline roles, by switching to informal acting work, “they continue to work at great risk”.

However, immigrants have also been saving money. Manuel Orozco, head of the Center for Immigration and Economic Stability at Creative Associates International, a development organization, said that compared with the 2008 economic downturn, American immigrants have a larger savings pool, partly because of Donald. Trump’s radical policies “began”. It is believed that it is important to be prepared when deported. ”

There are also other one-time factors-especially the large number of immigrants working in the Gulf and Russia who are unemployed due to weak oil prices and then return home with their savings.

There are also quirks in the data. The World Bank believes that the shift from informal to formal channels has facilitated recorded remittances-people who are no longer able to carry funds across borders have switched to digital transfers.

This in itself is a lesson for policymakers. Remittances are costly (the global average cost is 6.5% by the end of 2020) and has long prevented immigrants from sending them as much money as possible.

According to Wafa Aidi, an economist at the UN Economic Commission for Africa, there are several governments in the region. intervention Last year, in order to reduce these costs, tax incentives were provided, and money laundering checks for small transactions were abandoned or made it easier to deposit money in electronic wallets.

She said: “Mobile funding has always been an integral part of Africa’s response to Covid-19.”

The World Bank believes that remittances will resume growth in 2021, because immigrants from the United States and other wealthy economies will see an improvement in their income prospects, while families at home still need support.

However, developing countries cannot count on the growth in remittances experienced in the decade before the pandemic. Last year, the number of global immigrants fell for the first time in 70 years, and many countries that receive immigrants remain vigilant about opening their borders to new immigrants.

Eddie said that further efforts to reduce remittance fees will help. Remittances through official channels have broader benefits because they bring people into the financial system and provide a deposit base that can help banks in developing countries lend more.

But the biggest factor driving remittances is the demand for migrant workers. In the next few months, families in developing countries need rich countries to maintain their stimulus policies so that immigrants can obtain visas and continue to work.

Source link