The world is facing a severe global economic downturn; the IMF has forecasted that global growth will “slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023” (IMF, October 2022). A plurality of factors, including crippling inflation, the war in Ukraine and the hangover from the economic disruptions in the COVID-19 pandemic are creating a cost of living crisis and intensifying vulnerability for the poorest communities. However, in some good news, despite the economic turmoil and gloomy outlook, the flow of remittances has been relatively robust over the past few years and continues to provide the most stable source of support for many families in low and middle income countries.
Remittances are funds that are sent by individuals living and working abroad to their communities back at home. Both overseas development assistance (ODA) and remittances play a crucial role in the humanitarian ecosystem economy, providing a vital source of funding for development initiatives and supporting the livelihoods of individuals and families in the global south. While the formal humanitarian sector focuses most of it’s attention on ODA, as that is where their funding is predominantly from, the volume of cash transferred directly to communities through remittance flows greatly dwarfs any support provided through ODA.
According to the World Bank, global remittance flows reached $626 billion in 2022, an increase of approximately 5% (World Bank, November 2022). Though this increase is smaller than the substantial 10.2% rise in remittance flows in 2021 which surged global remittance levels to a record high, the fact that it has not contracted given the increasingly dire economic outlook should be regarded as a very good thing.
Data from World Bank Group Migration and Development Brief 37 (Nov 2022)
In their Migration and Development Brief, the World Bank has outlined the reasons they think that remittances have continued to grow in the face of the economic contraction but the main point is this: the determination of migrants to provide support to their communities back home.
In light of this, its clear that investing in livelihoods support for migrants in high-income countries could be one of the most important effective measures of supporting communities the world over. While this will could be politically unappealing in many countries where perceived competition for jobs and social resources are often fueled by pitting migrants against local communities, helping migrants legally access work and as quickly and safely as possible would have significant benefits for all concerned.
Bibliography:
IMF (October 2022) World Economic Outlook
World Bank Group (November 2022) “Remittances Grow 5% in 2022, Despite Global Headwinds”
World Bank Group. (2022). "Migration and Development Brief 37: Remittances and the 2030 Agenda for Sustainable Development." World Bank.