Global remittances are projected to decline sharply by about 20 percent in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. 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.
Studies show that remittances alleviate poverty in lower- and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labor in disadvantaged households. A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. “Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
The World Bank is assisting member states in monitoring the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affect remittance flows. It is working with the G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.
Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia (27.5 percent), followed by Sub-Saharan Africa (23.1 percent), South Asia (22.1 percent), the Middle East and North Africa (19.6 percent), Latin America and the Caribbean (19.3 percent), and East Asia and the Pacific (13 percent).
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 (more than 35 percent). In 2019, remittance flows to LMICs became larger than FDI, an important milestone for monitoring resource flows to developing countries.
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 COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease. In the past, remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship back home. This time, however, the pandemic has affected all countries, creating additional uncertainties.
“Effective social protection systems are crucial to safeguarding the poor and vulnerable during this crisis in both developing countries as well as advanced countries. In host countries, social protection interventions should also support migrant populations,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
The global average cost of sending $200 remains high at 6.8 percent in the first quarter of 2020, only slightly below the previous year. Sub-Saharan Africa continued to have the highest average cost, at about 9 percent, yet intra-regional migrants in Sub-Saharan Africa comprise over two-thirds of all international migration from the region.
“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families. These include treating remittance services as essential and making them more accessible to migrants,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.
Regional Remittance Trends
Remittance flows to the East Asia and Pacific region grew by 2.6 percent to $147 billion in 2019, about 4.3 percentage points lower than the growth rate in 2018. In 2020, remittance flows are expected to decline by 13 percent. The slowdown is expected to be driven by declining inflows from the United States, the largest source of remittances to the region. Several remittance-dependent countries such as those in the Pacific Islands could see households at risk as remittance incomes decline over this period. A recovery of 7.5 percent growth for the region is anticipated in 2021. Remittance costs: The average cost of sending $200 to the East Asia and Pacific region dropped to 7.13 percent in the first quarter of 2020, compared to the same quarter in 2019. The five lowest cost corridors in the region averaged 2.6 percent while the five highest cost corridors averaged 15.4 percent as of 2019 Q4.
Remittances to countries in Europe and Central Asia remained strong in 2019, growing by about 6 percent to $65 billion in 2019. Ukraine remained the largest recipient of remittances in the region, receiving a record high of nearly $16 billion in 2019. Smaller remittance-dependent economies in the region, such as Kyrgyz Republic, Tajikistan, and Uzbekistan, particularly benefited from rebound of economic activity in Russia. In 2020, remittances are estimated to fall by about 28 percent due to the combined effect of the global coronavirus pandemic and lower oil prices.
Remittance costs: The average cost of sending $200 to the ECA region declined modestly to 6.48 percent in the first quarter of 2020 from 6.67 percent a year earlier. The differences in costs across corridors in the region are substantial; the highest costs for sending remittances were from Turkey to Bulgaria, while the lowest costs for sending remittances were from Russia to Azerbaijan.
Remittances flows into Latin America and the Caribbean grew 7.4 percent to $96 billion in 2019. Growth in inflows was uneven across countries in the region. Brazil, Guatemala and Honduras saw a rise in remittances of more than 12 percent in 2019. Colombia, Ecuador, Nicaragua and Panama had an increase of more than 6 percent, while remittances to Bolivia and Paraguay declined by 3.8 percent and 2.2 percent, respectively.
In 2020, remittance flows to the region is estimated to fall by 19.3 percent. Remittance costs: The average cost of sending $200 to the region was 5.97 percent in the first quarter of 2020. Amid the COVID-19 crisis, the costs of transferring remittances to the region could increase due to operational challenges being faced by remittance service providers (closures of agents and offices, access to cash, foreign exchange, security) and compliance with AML/CFT regulations.
Remittances to the Middle East and North Africa region are projected to fall by 19.6 percent to $47 billion in 2020, following the 2.6 percent growth seen in 2019. The anticipated decline is attributable to the global slowdown as well as the impact of lower oil prices in GCC countries. Remittances from the euro area would also be impacted by the area’s pre-COVID-19 economic slowdown and the depreciation of the euro against the U.S. dollar.
In 2021, remittances to the region is expected to recover, albeit at a slow pace of around 1.6 percent due to projected moderate growth in the euro area and weak GCC outflows. Remittance costs: The cost of sending $200 to the region was 7 percent, largely unchanged from the previous year. Costs vary greatly across corridors. The cost of sending money from high-income OECD countries to Lebanon continues to be in the double digits. Sending money from GCC countries to Egypt and Jordan costs between 3 percent to 5 percent in some corridors. The Saudi Arabia to Syria corridor has experienced a dramatic fall in costs as the civil war in Syria has receded.
Remittances to South Asia are projected to decline by 22 percent to $109 billion in 2020, following the growth of 6.1 percent in 2019. The deceleration in remittances to the South Asian region in 2020 is driven by the global economic slowdown due to the coronavirus outbreak as well as oil price declines. The economic slowdown is likely to directly affect remittance outflows from the United States, the United Kingdom, and EU countries to South Asia.
Falling oil prices will affect remittance outflows from GCC countries and Malaysia. Remittance costs: South Asia had the lowest average remittance costs of any region, at 4.95 percent. Some of the lowest-cost corridors had costs below the 3 percent SDG target. This is probably due to high volumes, competitive markets, and deployment of technology. But costs are well over 10 percent in the highest-cost corridors due to low volumes, little competition, and regulatory concerns. Banking regulations related to AML/CFT raise the risk profile of remittance service providers and thereby increase costs for some receiving countries such as Afghanistan and sending countries such as Pakistan.
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. The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside including in the EU area, the United States, the Middle East, and China.
These large economies host a large share of Sub-Saharan African migrants and combined, are a source of close to a quarter of total remittances sent to the region. In addition to the pandemic’s impact, many countries in the Eastern Africa region are experiencing a severe outbreak of desert locusts attacking crops and threatening the food supply for people in the region.
Remittance costs: Sending $200 remittances to the region cost 8.9 percent on average in the first quarter of 2020, a modest decrease compared with the average cost of 9.25 percent a year before. The most expensive corridors are observed mainly in the Southern African region, with costs as high as 20 percent. At the other end of the spectrum, the less expensive corridors had average costs of less than 3.6 percent.
How to make the new ‘Living with Covid’ plan work for your small business
The UK government has confirmed that England will end all Covid self-isolation laws on Thursday, as part of its ‘Living with Covid’ plan. What does this mean for SMEs?
Earlier this month, Boris Johnson announced that all Covid-19 rules in England will be scrapped by the end of February.
The new plan has major implications for small businesses, including scrapping the requirement for individuals to self-isolate if they test positive for Covid-19.
Free mass testing is also scheduled to end on April 1.
Below, we look at what exactly the changes are, what they mean for small business owners, and how you can support and prepare your workforce for ‘Living with Covid’.
What is England’s ‘Living with Covid’ plan?
Boris Johnson’s ‘Living with Covid’ plan will take place over three stages.
The first stage has already taken place. New rules introduced on February 21 mean that staff and students in most education and childcare settings no longer have to test twice weekly.
But the change that will have the biggest impact on small businesses is the scrapping of all self-isolation rules from 24 February.
That means people with Covid will no longer be legally required to self-isolate for the previously-required period of five days.
Other new rules include:
- Guidance will remain that those who test positive stay at home for five days
- Contact tracing will end
- Workers will no longer need to tell their employer if they need to self-isolate
- Self-isolation support payments for those on low incomes will be scrapped
From 1 April:
- Covid-19 tests will no longer be free except for the most vulnerable
- Covid passports will be scrapped (except for international travel)
- Employers will no longer have to explicitly consider Covid in their health and safety risk assessments
The plan Boris Johnson has announced to end all legal restrictions is for England only. Restrictions remain in place in other parts of the UK.What do small business leaders think of the announcement?
In a press release, Federation of Small Businesses (FSB) National Chair Mike Cherry said: “Small firms right across England will be hoping that this week definitively marks the end of chopping and changing restrictions that have blighted them over the past two years.
“The priority now must be containing the virus and protecting community wellbeing whilst avoiding the need to shut down the economy entirely.”
What if my employees test positive for Covid-19?
The scrapping of Covid-19 self-isolation laws puts the responsibility of managing Covid-positive employees onto the business owner.
This means employers are in a slightly trickier situation when it comes to sick policies.
The government has said that ‘guidance’ will remain in place for those who test positive to stay at home and avoid contact with others for at least five full days.
But the lack of legal rules is likely to result in individuals attending the workplace whilst either positive for Covid-19 or showing symptoms.
With the majority of the UK adult population now fully-vaccinated, symptoms will be milder. It would be unusual for someone to take a week off work because of a cold, and it’s likely only those with serious and/or debilitating Covid-19 symptoms will take time off work.
How can I support members of staff who might be worried about testing positive?
Regardless of the law, the government’s new plan may raise difficult issues for employers, who need to walk a thin line between living with Covid-19 and ensuring the safety of staff.
Many employers have chosen the latter option in the past.
Indeed, data from employee parking software ParkOffice has shown that employers allowed their staff to abandon the office enmasse during the spread of the Omicron variant pre-Christmas, despite there being no official Government advice to restrict movement.
Over the four week period between late November and the traditional break for Christmas, ParkOffice found there was a massive 92.5% decline in office goers across the UK.
As more people return to the office, your staff might want to avoid individuals who attend the workplace whilst positive for Covid-19 because they feel it is unsafe.
Legally, employers have a duty to support these employees and manage risks to those affected by their business. Here are a few examples for what that might look like:
Health and safety assessment
While no longer legally required, the way to do this is to carry out a health and safety risk assessment – including the risk of COVID-19 – and to take reasonable steps to mitigate any risks to other employees who might be worried about becoming infected with Covid-19.
The Government’s working safety guidance sets out a range of mitigations employers should consider including identifying poorly ventilated areas and taking steps to improve air flow in these areas.
Run an employee engagement survey and/or forum
Employee feedback surveys are meant to improve productivity by understanding the way your employees think about your company’s current policies and ways of working.
Check the attitude of your workplace towards the new ‘Living with Covid’ plan with an anonymous feedback survey before you decide on any long-term policies.
It might be that your staff are happy to work with people who have tested positive for Covid – or, you might learn that they are unhappy with the new rules and will require more reassurance and support measures.
This is not only a helpful exercise for business leaders, as you can hear concerns and issues directly from your employees. It’s also a good communication channel for staff members to air any grievances and feel they are being listened to.
Similar to this approach is an employee engagement forum. This is essentially a team discussion amongst a handful of volunteers from your workforce who can then share their ideas on a problem and give feedback on how other employees might be feeling.
Implement your own self-isolation policy
If you feel that a large enough majority of your staff are concerned about the government’s new plan, there are more forceful steps you can take.
The end of the legal obligation to self-isolate does not prevent employers from having their own restrictions on workplace attendance for those who test positive for Covid-19 – if you choose to do so.
Typically, these rules would be contained in the employer’s policies and may, for example, stipulate that individuals who either test positive for Covid-19, and/or are displaying symptoms of the virus, work from home until a negative test is taken.
This more assertive action is not without potential risks, and you should make sure to properly communicate your reasoning to staff members to avoid alienating them.
You should also consider:
- Purchasing home-testing kits for employees who are displaying symptoms of Covid-19 and wish to take a test.As free testing has now been scrapped, putting the onus of purchasing a test on your employees could cause friction.
- Choosing to keep in place rules on face-coverings, hand washing and other safety measures should you wish. These might further reassure employees that the workplace is safe to continue working in.
The government’s ‘Living with Covid’ plan means it is now lawful for employees to attend the workplace with Covid-19 or with symptoms.
Still, employers should carry out employee surveys to check the temperature of their staff and keep an eye on the mood of the workplace on Covid-19 issues.
There is still debate about whether or not these restrictions should be lifted and a good employer should ensure they are addressing the concerns of staff members who might not feel safe coming into the office – particularly after nearly two years of living with Covid-19 safety measures.
Open communication through employee surveys and even specialist engagement committees will help your staff to function properly and ensure they feel properly supported.
Consul General of Liberaland in Pakistan Faisal Butt hails Imran Khan’s strategy that reduced Covid-19 Cases in Pakistan .
Lahore: Consul General of Liberland in Pakistan Faisal Butt has appreciated the strategy of the Pakistani government in view of the reduction of corona cases in Pakistan. In his statement, he said that Pakistan has taken better steps to control the spread of corona in comparison to the neighbouring countries .
As a result of these measures , Pakistan is rated amongst the lowest covid 19 cases reported countries . Not only the cases but also the death toll is much less than other countries.
He said that there was no doubt that Pakistan was making progress even in conditions like corona. All the credit goes to the government of Prime Minister Imran Khan.
Today, other Asian countries, including Europe, also appreciating Imran Khan’s strategy. He further said that the day is not far when the people of Pakistan will be vaccinated and declared a Corona free country.
Referring to the relations between Pakistan and Liberland, he said that Corona has enveloped the whole world, which has hampered relations, imports and exports with many countries. As soon as the situation improves, not only diplomatic but also trade relations between Pakistan and Liberals will be restored.
The Consul General said we are planing to sign the agreements between the Liberland Chamber of Commerce and the Lahore Chamber of Commerce. A plan of action will be announced soon.
What will the post-COVID world look like?
Although virologists have been warning of the risks of a global pandemic since the SARS outbreak in 2003, the world was still mostly unprepared when confronted with the COVID-19 crisis. However, it was also unlucky.
It was unfortunate that the pandemic came in the run-up to a US presidential election that has created an environment as politically polarized as any the country has experienced. As a result, much of the US media coverage of, and debate about, the virus and the global policies needed to deal with its effects have been more about the presidential race rather than the pandemic.
This has obviously had a clear effect on international politics because of the importance of the role of the US and its global leadership.
It was also bad luck that the health crisis came at a time of high tensions between the US and the second largest global power, China, where the virus originated. This further complicated any potential global unified response.
As a result of the global uncertainty, it is difficult to forecast how critical aspects of the crisis, which seems likely to continue for at least another 12 months, will play out in the Middle East, and also what a post-COVID world might look like.
One certainty is that most countries will be forced to shift their focus and resources to domestic matters rather than regional issues.
The virus and the resultant shutdowns imposed to “flatten the curve” of infections have had, and will continue to have, devastating consequences on economies and national budgets. It seems that despite the soft reopening of parts of economies around the world, the current health concerns will prevent a full restoration of business activities for some time, especially if the number of infections and deaths start to rise again after governments relax precautionary measures.
In our increasingly interconnected world, it is difficult to determine whether any country will come out on top economically, and consequently geopolitically, especially given mounting levels of debt.
Countries able to borrow in their own currency seem to be at an advantage; this applies mainly to the US and the EU (if the European countries can unify their policies), and indirectly also explains the current debate in the Gulf about the unpegging of currencies.
Another certainty is that with less money available, wars and proxy wars will become prohibitively expensive and all parties will be forced to scale down their ambitions. As a result, aggression will be reduced and consensus and agreement might be more readily reached. Countries and their allies or proxies who have refused to sit at the negotiation table might now change their minds and mellow, or perhaps even be forced to completely withdraw from conflict zones.
Take Iran, for instance, which has been targeted recently by a successful US policy of maximum pressure. The country is facing problems domestically and, with the added pressure of low oil prices, it will be less able to maintain its financial support to the Houthis in Yemen, the militias in Iraq, and Hezbollah.
Does that mean Tehran will cease its meddling? Nothing is certain but domestic turmoil might force it to do so.
As Iran’s problems have grown, the region has witnessed during the COVID-19 pandemic the emergence of a more assertive Turkey. This has happened despite the fact the country is also suffering economically.
It has been a long time in the making. Turkish involvement has spread to many regional issues beyond its normal national security zone. Its involvement in neighboring Syria is understandable, given that the conflict there directly threatens Turkey’s security. More interesting is the Turkish interest in Libya, where Ankara is pushing for a continued presence with no apparent direct threat or rationale to explain this. This is happening while it also increases political rhetoric that promises continued interference in the domestic affairs of Arab countries in the years to come.
A closer look at the issues reveals that Turkey is focusing its involvement on key points on Europe’s energy routes. This is not surprising, as Europe remains Ankara’s main and constant focus. So, Turkey is now directly competing with Russia — the biggest supplier of gas to Europe — in Syria, where Iran is also strongly entrenched as the country is a key Mediterranean access point for its gas and energy deliveries to Europe.
Turkey is challenging Russia for control of the tap that provides Europe with its energy stability, and this explains its involvement in Libya and other countries. The same logic explains Ankara’s negative reaction to the Israeli-Greek-Cypriot gas-pipeline project, EastMed. This motivates its strategy, as it hopes to leverage it to make more gains in the region.
Therefore, we can expect an increased Turkish focus on the Mediterranean and on supply-chain routes and access points for energy, as well as merchandise being shipped from the East to Europe.
On that point, the land routes of China’s Belt and Road Initiative include one that goes through Russia and another that passes through Turkey. This massive project is also something Turkey is well aware of, and Ankara is striving to ensure it has a presence on key points along the BRI’s Maritime Silk Road. Once again, it is being guided not by national security concerns but a desire to increase its regional clout.
It is difficult to forecast how critical aspects of the corona crisis will play out in the Middle East.
Khaled Abou Zahr
While Russia and Turkey face off on the ground over an increasing number of issues, it is interesting to note the apparent lack of any direct involvement by the US or China, the two biggest global powers, and, surprisingly, the total absence of European nations, which should be the most concerned about what is happening.
In weighing how global and regional powers will direct their foreign policies and manage existing conflict zones, their own domestic political, economic and social stability will play an important role.
Yet, apparent weaknesses might invite bold moves and dangerous power-grab attempts. This delicate balance will be the key driver for international policies in the coming years. One might say that uncertainty and volatility have spread from the stock-markets to the geopolitical arena.
- Khaled Abou Zahr is the CEO of Eurabia, a media and tech company. He is also the editor of Al-Watan Al-Arabi.
Courtesy : Arabnews.pk
Top 10 Investment Opportunities in Dubai 2024: A Comprehensive Guide
Challenges to Growth of US Economy After Presidential Elections 2024 and Beyond
Asian Economic Calendar: Key Events and Consensus Expectations for 26 January 2024
Why Are Voters So Frustrated in the US Despite a Booming Economy?
Top 10 World Economies in 2024: Growth Prospects and Analysis
UK Government Borrowing Falls to Record Low in December: What This Means for Tax Cuts
10 Reasons Why Europeans and Asians Choose Dubai for a Better Life and Luxuries
Embracing the Green Wave: New Jobs, Green Jobs Dominate Hiring Landscape
Companies Rush to Bond Market in Record $150bn Debt Splurge: Implications and Analysis
China’s Metaverse Working Group: A Step Towards Global Technology Leadership
Mastering Success: A Definitive Guide for Entrepreneurs, Small Business Owners, and Startups in the Digital Age
Islamic Economic System: A Comprehensive Guide to its Principles and Application in Modern Times
Ethereum Restaking Poised to Take Center Stage in 2024 Crypto Scene
Building Cyber Resilience for KSA’s Vision 2030: Empowering Human Capital
SoftBank’s Son Piles on Debt, Fueling Controversy Around Lavish Silicon Valley Mansion
The Rise of Chinese Cars in the West: A Threat or an Opportunity?
Rising from the Desert: How the UAE is Shaping the Future of Crypto
10 Reasons Why Europeans and Asians Choose Dubai for a Better Life and Luxuries
Soaring Dreams: China’s Ambitious Leap into the Low Altitude Economy
Riding the Tech Wave: S&P 500 Hits a Record High
Digital3 years ago
Social Media and polarization of society
Digital3 years ago
Pakistan Moves Closer to Train One Million Youth with Digital Skills
Digital3 years ago
Karachi-based digital bookkeeping startup, CreditBook raises $1.5 million in seed funding
News3 years ago
Dr . Arif Alvi visits the National Museum of Pakistan, Karachi
Digital3 years ago
WHATSAPP Privacy Concerns Affecting Public Data -MOIT&T Pakistan
Kashmir3 years ago
Pakistan Mission Islamabad Celebrates “KASHMIRI SOLIDARITY DAY “
Business2 years ago
Are You Ready to Start Your Own Business? 7 Tips and Decision-Making Tools
China3 years ago
TIKTOK’s global growth and expansion : a bubble or reality ?