India to retain top rank with $80 billion in remittance in 2018

India is poised to retain its position as the world's top recipient of remittances by recording a 22.5 per cent jump to $80 billion in money sent home in 2018 by overseas Indians, the World Bank said in a report on Saturday.
Other top recipient nations include China ($67 billion), Mexico and the Philippines ($34 billion each) and Egypt ($26 billion), according to the latest edition of the World Bank's Migration and Development Brief.
Remittances to South Asia are projected to increase by 13.5 per cent to $132 billion in 2018, at a stronger pace than the 5.7 per cent growth seen in 2017. Bangladesh and Pakistan both experienced strong upticks of 17.9 per cent and 6.2 per cent in 2018, respectively, the bank said.
"The upsurge is driven by stronger economic conditions in advanced economies, particularly the US, and the increase in oil prices having a positive impact on outflows from some GCC countries such as the UAE which reported a 13 per cent growth in outflows for the first half of 2018," said the report.
The UAE, which is a host country for around three million Indian expatriates, has traditionally been the largest source of remittances to India. The UAE's share in total remittances to India was 26.9 per cent followed by the United States (22.9 per cent), Saudi Arabia (11.6 per cent), Qatar (6.5 per cent) and Kuwait (5.5 per cent), according to 2017 data released by the Reserve Bank of India three months ago.
The Washington-based World Bank estimates that officially-recorded remittances to developing countries will increase by 10.8 per cent to reach $528 billion in 2018. This new record level follows a robust growth of 7.8 per cent in 2017.
The Indian economy is on the fast track and among the top growing ones, which is aptly complimented by the Indian citizens living outside the country, said Shetty.
Adeeb Ahamed, managing director, LuLu Financial Group, said the growth pace for remittances over the past three years have been quite significant, with Asian expats making good use of the weakened currencies to send money home at favourable exchange rates.
"With strong economic conditions in countries like the UAE, and with money transfer industry making headway in the digital space in the region, we expect remittance outflows to further increase in 2019," said Ahamed.
He said remittances benefit the sending and receiving countries in multiple ways - both at the level of the individual as well as the state. "Various factors including global oil prices, trade wars, GDP slowdown as well as the upcoming general elections in India will further dictate the movement of the rupee in the coming year," said Ahamed.
In its report, the World Bank noted that global remittances, which include flows to high-income countries, are projected to grow by 10.3 per cent to $689 billion, it said.
India has registered a significant surge in remittances over the past three years - from $62.7 billion in 2016 to $65.3 billion 2017. In 2017, remittances constituted 2.7 per cent of India's gross domestic product, the World Bank said.
For 2019, it is projected that remittances growth for the South Asia region will slow to 4.3 per cent due to a moderation of growth in advanced economies, lower migration to the GCC and the benefits from the oil price spurt dissipating.
The report said as global growth is projected to moderate, future remittances to low- and middle-income countries are expected to grow moderately by 4 per cent to reach $549 billion in 2019. Global remittances are expected to grow 3.7 per cent to $715 billion in 2019.
However, the bank noted that the global average cost of sending $200 remains high at 6.9 per cent in the third quarter of 2018. Reducing the cost of remittance to three per cent by 2030 is a global target under Sustainable Development Goal (SDG) 10.7.
Increasing the volume of remittances is also a global goal under the proposals for raising financing for the SDGs, the bank said.
"Even with technological advances, remittances fees remain too high, double the SDG target of 3 per cent. The average cost of remitting in South Asia was the lowest at 5.4 per cent, while Sub-Saharan Africa continued to have the highest at nine per cent," the report said.
"Opening up markets to competition and promoting the use of low-cost technologies will ease the burden on poorer customers," said Mahmoud Mohieldin, senior vice-president for the 2030 Development Agenda, United Nations Relations, and Partnerships at the World Bank.
- issacjohn@khaleejtimes.com
 
 
 

Issac John

issacjohn@khaleejtimes.com