Migrants from low- and middle-income countries are expected to send almost £600bn to support friends and relatives by the end of the year, after global economic growth spurred a 7.3% rebound in remittance payments.
The increase in cross-border payments, especially from migrants based in Europe and the US, reversed a 1.7% fall in remittance payments last year, the World Bank said.
Eighteen months ago the bank, based in Washington DC, feared that the pandemic would send remittance payments plunging by about 20% over the next two years.
However, the rapid recovery during 2020 and 2021 meant the scale of payments to these countries from former residents working overseas surpassed the sum of overseas aid and foreign direct investment from richer nations.
The World Bank said its annual survey of foreign exchange transactions, excluding those for China, showed remittances would grow to $589bn in 2021.
“This underscores the importance of remittances in providing a critical lifeline by supporting household spending on essential items such as food, health and education during periods of economic hardship in migrants’ countries of origin,” it said.
Latin American and Caribbean countries were the biggest beneficiaries of remittances, mostly from family members based in the US. Flows to these regions increased by 21% over the last year.
Countries in sub-Saharan Africa were among the least supported by former residents, which the World Bank partly blamed on high transaction charges.
The cost of sending $200 across international borders averaged 6.4% of the amount transferred, in the first quarter of 2021, the development bank said. This was more than double the 2030 Sustainable Development Goals target of 3%, but below the 8% it costs to send the benchmark sum to sub-Saharan Africa.
“Costs tend to be higher when remittances are sent through banks rather than through digital channels or through money transmitters offering cash-to-cash services,” the World Bank said.
Michal Rutkowski, the World Bank’s global director for social protection and jobs, said: “Remittance flows from migrants have greatly complemented government cash transfer [programmes] to support families suffering economic hardships during the Covid-19 crisis.
“Facilitating the flow of remittances to provide relief to strained household budgets should be a key component of government policies to support a global recovery from the pandemic.”
The report found that the strong growth in remittances was due to “migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the US, which in turn was supported by the fiscal stimulus and employment support [programmes]”.
Remittances are projected to grow by 2.6% in 2022, in line with the World Bank’s forecasts for a gentle expansion of the global economy that year.