World Bank says remittance growth only seen in Caribbean
The World Bank says the only region to record growth in remittances in 2016 was Latin America and the Caribbean.
On Friday, the Washington-based financial institution said regional growth was estimated at US$73 billion, an increase of 6.9 per cent over 2015.
"Remittance senders took advantage of the strong US labour market and beneficial exchange rates," said the World Bank, adding that robust remittance growth was estimated for Mexico, El Salvador and Guatemala.
The World Bank is projecting remittances to the region to grow by 3.3 per cent to US$75 billion in 2017.
Remittances to developing countries fell for a second consecutive year in 2016, a trend not seen in three decades, according to the latest edition of the Migration and Development Brief, released by the World Bank during its spring meetings.
The bank estimated that officially recorded remittances to developing countries amounted to US$429 billion in 2016, a decline of 2.4 per cent. In 2015 it amounted to US$440 billion.
Global remittances, which include flows to high-income countries, contracted by 1.2 per cent to US$575 billion in 2016, compared with the US$582 billion in 2015.
The bank said low oil prices and weak economic growth in the Gulf Cooperation Council countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and sub-Saharan Africa.
The decline in remittances was made worse by a weaker euro, British pound and Russian ruble against the US dollar, the World Bank said.
As a result, it said many large remittance-receiving countries saw sharp declines in remittance flows. India, while retaining its top spot as the world's largest remittance recipient, led the decline with remittance inflows amounting to US$62.7 billion last year, a decrease of 8.9 per cent compared to the $68.9 billion in 2015.
"Remittances are an important source of income for millions of families in developing countries. As such, a weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition," said Rita Ramalho, acting director of the World Bank's Global Indicators Group.
In keeping with an improved global economic outlook, remittances to developing countries are, however, expected to recover this year, growing by an estimated 3.3 per cent to US$444 billion in 2017.
The World Bank noted that the global average cost of sending US$200 remained flat at 7.45 per cent in the first quarter of 2017, although this was significantly higher than the United Nations' Sustainable Development Goal target of 3 per cent.
The World Bank said a major barrier to reducing remittance costs is de-risking by international banks, when they close the bank accounts of money transfer operators, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime.
"This has posed a major challenge to the provision and cost of remittance services to certain regions," the bank said.