India positioned as the world's largest recipient of remittances: World Bank Report
In its report, Recovery COVID-19 Crises Through A Migration Lens: The Migration and Development Brief, the World Bank provides an update on global migration and remittance trends. This report highlights developments related to migration-related Sustainable Development Goals (SDG) indicators for which the World Bank is a custodian: reducing remittance costs (SDG indicator 10.c.1) and increasing remittance volumes as a percentage of gross domestic product (SDG indicator 17.3.2). By 2021, remittance flows to low- and middle-income countries (LMICs) are projected to reach US$ 589 billion, an increase of 7.3 percent. Remittances recovered in 2021 in the face of one of the deepest recessions in recorded history, following the resilience seen in 2020, when they recorded only a modest 1.7 percent decline to US$ 549 billion. Including China, remittances surpass official development assistance by more than threefold and foreign direct investment by more than half.
Remittances play a significant role in smoothing consumption in recipient countries during times of economic hardship. With weak new migration flows and large return migration in 2020 and 2021, the international migrant stock appears to have declined for the second consecutive year. The migrant community stepped up support for families back home in all developing regions of the world, especially those affected by the spread of the COVID-19 Delta variant. The ability to help was enabled by a pickup in economic activity and employment in major migrant destination countries, supported partly by exceptional COVID-19 emergency fiscal stimulus and accommodative monetary policies.
Among the top five remittance recipients in US dollar terms in 2021 were India, China, Mexico, the Philippines, and the Arab Republic of Egypt. In 2021, the top five remittance recipients were all smaller economies: Tonga, Lebanon, Kyrgyzstan, Tajikistan, and Honduras. U.S. remittances were the largest source of remittances in 2020, followed by UAE, Saudi Arabia, and Switzerland.
Chart: Top recipients of remittances among Low and Middle-Income Countries
Source: PHD Research Bureau, PHD Chamber, compiled from World Bank report
Outlook for India
Remittances to India (the world's largest recipient of remittances) are expected to reach $87 billion, an increase of 4.6 percent-with the severity of the COVID-19 outbreak and deaths during the second quarter (well above the global average) playing a prominent role in drawing altruistic flows (including for the purchase of oxygen tanks) to the country. The outlook for remittances in 2022 includes risks on the downside, with high-frequency data suggesting a slowdown in most South Asian countries during the last few months of 2021.