Slow growth in remittances to the Caribbean

The World Bank says remittances growth in the Caribbean is expected to slow in 2015.

The Washington-based international financial institution said in its latest issue of its Migration and Development Brief that growth in global remittances, including those to developing countries, such as the Caribbean, will slow sharply this year due to weak economic growth in Europe, deterioration of the Russian economy and the depreciation of the euro and ruble.

In the Latin America and Caribbean region, the World Bank said remittances are expected to grow by 2.3 percent in 2015 to US$66 billion.

“While this growth is slower than that seen in 2014, it is significantly higher than the anemic pace of the post-crisis period,” the report says.

It, however, said the outlook for the region is “positive, as remittance inflows are expected to benefit from growth in GDP (Gross Domestic Product) and employment in the United States, although this will be offset by high unemployment in Spain.”

The report says remittances to the region are expected to grow to US$69 billion in 2016 and US$71 billion in 2017.

Officially recorded remittances to the developing world are expected to reach US$440 billion in 2015, an increase of 0.9 percent over the previous year, the report says.

It says global remittances, including those to high income countries, are projected to grow by 0.4 percent to US$586 billion.

Overall, the report says the 2015 remittance growth rates are the slowest since the global financial crisis in 2008/09.

Nonetheless, it says the number of international migrants is expected to exceed 250 million in 2015, adding that their savings and remittances are expected to continue to grow.

“The slowdown in the growth of remittances this year will affect most developing regions, in particular Europe and Central Asia where flows are expected to decline by 12.7 percent in 2015,” the report says.

“The positive impact of an economic recovery in the US will be partially offset by continued weakness in the Euro Area, the impact of lower oil prices on the Russian economy, the strengthening of the US dollar, and tighter immigration controls in many remittance source countries,” it adds.

In line with the expected global economic recovery next year, the global flows of remittances are expected to accelerate by 4.1 percent in 2016, to reach an estimated US$610 billion, rising to US$636 billion in 2017, the report says.

It says remittance flows to developing countries are expected to recover in 2016 to reach US$459 billion, rising to US$479 billion in 2017.

The report says the top five migrant destination countries continue to be the United States, Saudi Arabia, Germany, Russia and the United Arab Emirates (UAE).

In addition to sending money to their families, the report says international migrants hold significant savings in their destination countries.

It says “Diaspora savings” attributed to migrants from developing countries were estimated at US$497 billion in 2013, the latest data available.

Because remittances are large and more stable than many other types of capital flows, the report says they can “greatly enhance the recipient country’s sovereign credit rating, thus lowering borrowing costs and lengthening debt maturity,”

The report notes that the joint World Bank-International Monetary Fund (IMF) low-income country Debt Sustainability Framework now includes remittances in evaluating the ability of the countries to repay external obligations and their ability to undertake non-concessional borrowing from other private creditors.

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