According to the latest World Bank’s Report, last year’s remittances to the third world countries were at a record breaking level.

Labour migrant are sending home a lot of money that became a strong industry in its own right for the countries. Importing labour and getting paid via the money migrants send home is a giant contributor to the economy of many countries, including Ukraine.

Record of remittance flows

The 2017 year record of 483 billion dollars was beaten by 9.6% with 2018’ maximum climbing to 529 billion dollars, the report points out.

The 2018 overall remittances for the whole planet came to 689 billion dollars, which is also higher, by contrast to previous year pointer of 633 billion dollars.

In more detail, the range of increases in remittance streams was from 7% (the East Asia marker) to 12% (the marker for South Asia). The main drivers of global growth were improved economical and employment situations in USA as well as rebound in outward streams of money from some countries-participants of the GCC (Gulf Cooperation Council) and Russia. The 2018 remittances to non-profitable countries, with the exception of China, were substantially higher (462 billion dollars) than straight investments that amounted to 344 billion dollars.

The main receivers of 2018 remittances were India (79 billion dollars), succeeded by China (67 billion dollars), then – Mexico (36 billion dollars), the Philippines (34 billion dollars) and Egypt with 29 billion dollars.

Moreover, the World Bank analytics forecast that the 2019 remittances to the middle- and low-income world would keep on climbing and will arrive at 550 billion dollars figure, becoming the main source of extrinsic financing.

2019 may create a new record

The bank has already reviewed data for the first quarter of 2019 and its Remittance Prices Worldwide report estimated that the average price of sending for that period was as high as 200 dollars, which came to about 7% marker. Nevertheless, the ambition of SDG (Sustainable Development Goal) is to reduce the global average rate of sending to 3% by 2019. The average costs of remittances to most African countries and minor Pacific isles now stick around 10%.

Statistics for the first three months of 2019 showed that banks remained the most expensive of all remittance pathways – they charged on average an 11 % fee. Banks were followed by post offices, which fee was about 7%. Most of such charges included premiums as a result of cooperation between money transfer agencies and post offices. As for the 2018 last quarter data, a global average premium ranged from 1.5% to 4%.

Commenting on remittance costs’ reduction target, Dilip Ratha, the head of KNOMAD and the leading author of Brief, explained, “Remittances have a good chance to become a principal form of external financing in emerging countries. The advantages of migration are greatly reduced by high rates of money transfers. One of the ways to reduce remittance prices is to let more operators to cooperate with national banks, post offices and telecommunication entities. This will boost competition, open the door to less exclusive partnerships and will eventually lead to the aimed reduction.”

Statistics for the first three months of 2019 showed that banks remained the most expensive of all remittance pathways – they charged on average an 11 % fee.

Territorial Remittance Trends

The 2017 increase of 22 % for the remittances to Central Asia and Europe was not the end of growth. In 2018 it exceeded the predicted 11% marker to 59 billion dollars.

Continuing increase in economy of USA, Poland, Spain and Russia had a positive impact on the growth of outbound streams of money from these countries making them main regional suppliers of remittances. Small remittance recipients such as Uzbekistan, Tajikistan and Kyrgyz Republic greatly favored from revival of Russian economy.

Ukraine, the largest remittance-dependent country in the region, registered in 2018 another record of more than 14 billion dollars – with the 19% of growth by contrast to 2017. This boost was also caused by the revised approach of Ukraine to assessment of arriving remittances and the increased demand for migrant labor in nearby countries.

The 2018 money transfers to the East Asia and Pacific territories increased by about 7% to 143 billion dollars, which was 2% quicker than 2017 pointer of 5%.

The 2018 remittances’ streams to South America and Caribbean region popped up by 10%, resulting from an improvement in the US economical activity.

The 2018 money transfers to North Africa and Middle East increased by 9% to 62 billion dollars.

South Asia received in 2018 about 131 billion dollars. The growth of remittances amounted to 12%, which was 6% more than 2017 growth.

Strong economy and high incomes of other countries caused high amounts of money transfers to Sub-Saharan Africa resulting in 10% rise to 46 billion dollars for the year 2018.

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