The World Bank has predicted that global remittances will decline by 20 percent in 2020 due to the economic crisis induced by the Covid-19 pandemic and lockdown in some countries.
It further projects that remittances will decrease by 23.1 percent in the sub-Saharan Africa.
Remittances are funds or money that is sent by a foreign worker back to their country.
Reacting in an interview Thursday, Reserve Bank of Malawi spokesperson, Mbane Ngwira, said the global trend may determine situation for Malawi.
He said in 2019, formal receipts from diaspora amounted to $265.7 million against a target of $250 million.
“Our target for 2020 is $300 million. As of now, we have not fully assessed the impact of Covid-19 on remittances. It may go either way as diaspora try to assist Malawians to mitigate the effects,” Ngwira said
A statement released by the Bretton Woods institution on Wednesday indicates that the 20 percent drop in remittances will be the sharpest in recent history.
Largely, this is due to a fall in the wages and employment of migrant workers who are vulnerable to loss of employment and wages during an economic crisis.
It adds that remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.
“The large decline in remittances flows in 2020 comes after remittances to LMICs reached a record $554 billion in 2019. Even with the decline, remittance flows are expected to become even more important as a source of external financing for LMICs as the fall in foreign direct investment is expected to be larger.
“In 2021, the World Bank estimates that remittances to LMICs will recover and rise by 5.6 percent to $470 billion. The outlook for remittance remains as uncertain as the impact of Coved-19 on the outlook for global growth and on the measures to restrain the spread of the disease,” reads the statement in part.
It further says remittances to Sub-Saharan Africa registered a small decline of 0.5 percent to $48 billion in 2019.
Due to the Covid-19 crisis, remittance flows to the region are expected to decline by 23.1 percent to reach $37 billion in 2020, while a recovery of 4 percent is expected in 2021.
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