Remittances to the Middle East and North Africa (MENA) region are expected to fall 19.6% to $47bn in 2020 following the 2.6% growth achieved in 2019, according to a recent World Bank (WB) report.
The report, entitled, “Migration and Development Brief: COVID-19 crisis through a migration lens”, said the decline is the result of the ongoing coronavirus (COVID-19) pandemic and resulting shutdown.
The anticipated decline comes on the back of the global slowdown and lower oil prices in Gulf Cooperation Council (GCC) countries, the report said. It added that all major remittance receiving countries will likely see a sharp decline in the money due to the pandemic.
Remittances from Europe are also projected to take a hit from the area’s pre-COVID-19 economic slowdown and the depreciation of the Euro against the US dollar, the report said. This would particularly affect Morocco and Tunisia, which are projected to have remittance declines of around17% to 18%.
In 2021, remittances to the region are expected to recover, albeit at a slow pace of around 1.6% due to projected moderate growth in the Euro area and weak GCC outflows, the report said. It added that the cost of sending $200 to the region stands at 7% of that total, while sending money from GCC countries to Egypt and Jordan costs between 3% to 5% of the amount.
Global remittances are projected to face a sharp 20% decline in 2020 due to the pandemic and economic slow down. The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in wages and employment of migrant workers. This employee sector tends to be more vulnerable to redundancies and wage stoppages during an economic crisis in a host country.
The economic crisis due to the coronavirus could be even longer, deeper, and more pervasive than these estimates imply. In host countries, the pandemic has created additional challenges in sectors that depend on the availability of migrant workers.
The crisis has disproportionately impacted food and hospitality, retail and wholesale, tourism and transport, and manufacturing. As the farming season begins in many countries, there are emerging signs of agricultural labour shortages in industrial countries that rely on migrant workers for this sector. Given the seasonality of agriculture, worker shortages have given rise to concerns about food security later in the year, the report noted.