India will retain its position as the world’s top recipient of remittances this year with its diaspora sending a whopping $80 billion back home, the World Bank said in a report on Saturday.
India is followed by China ($67 billion), Mexico and the Philippines ($34 billion each) and Egypt ($26 billion), according to the global lender.
With this, India has retained its top spot on remittances, according to the latest edition of the World Bank’s Migration and Development Brief.
The bank estimates that officially-recorded remittances to developing countries will increase by 10.8pc to reach $528 billion in 2018. This new record level follows a robust growth of 7.8pc in 2017.
Global remittances, which include flows to high-income countries, are projected to grow by 10.3pc to $689 billion, it said.
Over the last three years, India has registered a significant flow of remittances from $62.7 billion in 2016 to $65.3 billion 2017. In 2017, remittances constituted 2.7pc of India’s GDP, it said.
The bank said remittances to South Asia are projected to increase by 13.5pc to $132 billion in 2018, a stronger pace than the 5.7pc growth seen in 2017.
The upsurge is driven by stronger economic conditions in advanced economies, particularly the US, and the increase in oil prices having a positive impact on outflows from some GCC countries such as the UAE which reported a 13pc growth in outflows for the first half of 2018.
For 2019, it is projected that remittances growth for the region will slow to 4.3pc due to a moderation of growth in advanced economies, lower migration to the GCC and the benefits from the oil price spurt dissipating.
As global growth is projected to moderate, future remittances to low- and middle-income countries are expected to grow moderately by four per cent to reach $549 billion in 2019. Global remittances are expected to grow 3.7pc to $715 billion in 2019.
The brief notes that the global average cost of sending $200 remains high at 6.9pc in the third quarter of 2018. Reducing remittance flows to three per cent by 2030 is a global target under Sustainable Development Goal (SDG).
Increasing the volume of remittances is also a global goal under the proposals for raising financing for the SDGs, it said.
“Even with technological advances, remittances fees remain too high, double the SDG target of 3 per cent. Opening up markets to competition and promoting the use of low-cost technologies will ease the burden on poorer customers,” said Mahmoud Mohieldin, Senior Vice President for the 2030 Development Agenda, United Nations Relations, and Partnerships at the Bank.
The average cost of remitting in South Asia was the lowest at 5.4pc, while Sub-Saharan Africa continued to have the highest at 9pc.
No solutions are yet in sight for practices that drive up costs, such as de-risking action of banks, which lead to closure of bank accounts of remittance service providers.