Remittance growth and the pandemic's surprising effect
In almost two decades the World Bank has recorded an exponential growth in remittance volumes, growing tenfold since 1990 to 2019. Remittances are transfers of money that migrants working abroad send home to their loved ones. These transfers play a very large role in the economies of small and developing countries, as they don’t only provide and support families, but they help combat poverty and raise the standard of living for such low-income nations. It is estimated that each year more than 270 million migrants working and living abroad remit cash back home. Further proving that remittances are not only essential to the families receiving it, but also to the economies of small and developing countries; the World Bank data recorded in 2019 that emerging markets and developing economies received over half a trillion dollars of remittances, where for 66 countries they represented more than 5% of GDP (often exceeding foreign direct investment and official development assistance).
Nowadays one cannot simply omit the effect of the pandemic, especially when dealing with things such as economies and its inflows and outflows of money. In 2020 the pandemic hit hard for every single country and every economy was exposed. This was no different for the remittance market, but while remittance flows were projected to fall, with a decline of over $100 billion, the World Bank recorded that the decline was much smaller than expected, and smaller than during the 2009 crisis. They recorded a fall of only 1.6% below 2019, with $540 billion in 2020 compared to that of $548 billion in 2019. The top five countries receiving remittances in 2020 in USD were India at 83 billion, China at 60 billion, Mexico at 43 billion, The Philippines at 35 billion, and Egypt at 30 billion. These remittances provided a lifeline for the families back home, as without the support of their loved ones abroad the pandemic and its effect on all economies left little hope.
Surprisingly enough, one of the markets that saw the smallest decline was the Philippines. In 2020, they recorded only 0.8% lower remittances than in 2019. According to the latest figures available, it is estimated that over 10 million Filipinos live and work abroad. These migrant Filipinos are known as the strong pillars of the Philippine economy, as in 2019 personal remittances accounted for around 35.2 billion USD; nearly 10% of the country’s GDP. Remittances have proven extremely important, not only in the Philippines but worldwide, as they are a direct investment that most times surpasses the help from governments or even of investments made by foreign countries. Each migrant works hard to provide, even if they have to ask for loans and can’t even make ends meet for themselves.
It may seem shocking to some that remittances have often surpassed foreign direct investment and help from governments, but it seems often forgotten that these migrants are hard working people. This market isn’t only focused or related to money, it is related to people, family, and community. This is why so many sacrifice so much, why they leave behind their young children, their parents, siblings, and their hometown. Everything they have ever known to love and recognize they choose to leave behind in search of a greater good. To provide for their families, their friends, and to change the future of the young ones. Remittances are too often talked about in a cold manner, simply through numbers and data, but what one cannot forget, is that each number represents something bigger.