Global remittances could fall by as much as $108.6 billion in 2020 if it takes a year to contain the coronavirus pandemic and reopen economies, according to Asian Development Bank (ADB) economists.
“Migrant workers are among the hardest hit groups, with many facing scant job security and limited access to social assistances,” ADB economists James Villafuerte and Aiko Kikkawa Takenaka wrote in a blog posted on Manila-based lender’s website.
Large-scale unemployment and wage reduction among migrant workers threaten households in Asia-Pacific, where remittance receipts may be cut by $54.3 billion this year, according to the authors. South Asia could be hardest hit, with remittances falling by a quarter from their 2018 level, while they could decline 19% in Southeast Asia, the authors wrote.
Remittances to Asia Pacific, which amounted to $315 billion in 2019, are an important source of income for families and help boost recipient nations’ external financing. Governments in the region could help manage the impact by extending temporary social services and providing income support to poor recipient families, among other policies, the authors wrote.
Job losses drain overseas money
For millions of Filipinos, money sent home by a relative working overseas can make the difference between hunger and survival. This year, those funds may not arrive.
With coronavirus bringing the global economy to a standstill, planes carrying workers from abroad back to the Philippines have become a common sight at Manila’s airport.
The worldwide surge in job losses is upending $690 billion global remittance industry, an essential support for many developing economies. Citigroup Inc. estimates that global flows could plunge by as much as $100 billion under a worst-case scenario.
Remittances to the Philippines reached $30 billion last year, making it one of the biggest foreign-exchange earners after exports. Remittances amount to about 10% of the country’s gross domestic product, a far higher proportion than in places like India and China, which also have vast numbers of citizens working abroad.
The Philippines is the fourth-largest recipient of remittances globally, according to World Bank data. About 75% of that money is spent, with much going for essentials like food, education and health care, according to ANZ’s Mathur.