Immigrants are still sending lots of money home despite the coronavirus job losses – for now


NEW YORK: Banks and aid agencies have been warning of a pandemic-related plunge in the amount of sent by migrants to family back home who rely on the income. In a typical year, more than 270 million migrants living and working abroad send these cash transfers, known as , to their home countries.

Yet so far, despite the lockdowns that have devastated wealthier economies and caused massive unemployment, remittances have generally held up this year. In some cases they’ve even been higher than usual, based on our review of the latest available data and press releases for top remittance recipient countries. Remittances to Mexico, for example, surged 9.4% in the first eight months of the year. Pakistan is also experiencing a record increase, while cash transfers to such countries as Vietnam and the Philippines have held steady.

There a few likely reasons for the positive for these and other countries – but there’s also reason to worry.

The importance of remittances

Remittances normally flow from rich countries like the U.S., the United Arab Emirates and Germany to lower- and middle-income countries.

In 2019, migrants sent a record US$554 billion home. This is more than the sum of all investments made by foreign companies in such developing countries and over triple the amount of aid governments provide.

Remittances are also more dependable than either international aid or investment. During bad times, remittances tend to increase, while foreign investments usually fall. And beyond directly supporting the intended recipient, they are essential for helping poorer nations fight poverty and improve health care and education.

Our research with Michael Clemens on Filipino workers in South Korea, for example, found that overseas work increased investment in their children’s education and health care by several hundred percent. In such South Asian countries as , Pakistan and Bangladesh, remittances have helped reduce poverty.

In some countries, remittances are a substantial part of the national , in some cases making up as much as 30% of GDP.

This is why forecasts of a sharp drop in remittances due to the coronavirus pandemic and lockdowns were so alarming. In April, the World Bank projected a 20% decline in remittances to low- and middle-income countries. This would have amounted to more than $100 billion in lost income, equivalent to two-thirds of all foreign aid distributed by governments in 2019.

Remittances stay strong

Many countries did experience an initial hit to remittances in the spring, but summer cash transfers mostly made up for it. And some countries have experienced rising remittances throughout the pandemic.

Mexico, which took in over $38 billion last year, received the most remittances in a single month ever in March, with cash transfers continuing to surge through the summer. Egypt is seeing a nearly 8% jump this year.

In the Philippines, where remittances make up 10% of GDP, money transfers decreased in the spring but mostly recovered later in the year. The story was similar in Vietnam, Bangladesh, El Salvador and Honduras.

Some likely causes

So what explains these rising or steady remittance flows? While there’s no definitive answer because of a lack of data, there are a few possibilities.

Despite the onset of severe recessions, many migrant workers have been able to keep earning income. For one thing, they tend to be employed in essential businesses such as agriculture and construction that have not suffered as much during the pandemic. In Europe, in certain essential sectors, migrant workers account for a third of all workers.

And governments in some countries such as Italy and Portugalhave implemented reforms that are making it easier for undocumented workers to access services or even offering temporary citizenship to some. France, Spain and Germany, meanwhile, are opening u

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