Close to quarter billion dollars remitted in COVID’s first year, possibly bucking wider trend

Up to two months before last Christmas, loved ones sent home almost a quarter billion dollars from the Barbadian diaspora, according to World Bank Group estimates.

But the flow of cash to Barbadian families and individuals may have bucked the trend the international financial institution predicted for the first year of the coronavirus pandemic.

Up to October last year, Barbadians overseas sent $188 million ($US94 million) in remittances to Barbados, the World Bank Group reported in its annual remittances data.

At a rate of $15.7 million a month, the remittances here appear on course to surpassing 2019 levels when a total of $216 million (US$108 million) was sent here at a monthly rate of $18 million.

There was no data immediately available for remittance outflows over the past several years.

Shortly after the COVID-19 pandemic began a year ago, the World Bank Group forecast that global remittances would decline sharply by about 20 per cent in 2020 due to the economic crisis and shutdowns induced by the pandemic.

“The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country,” the financial institution said then.

The Washington-based institution said that remittances to low and middle-income countries globally would fall by 19.7 per cent to reach $890 billion (US$445 billion) last year, representing a loss of “a crucial financing lifeline for many vulnerable households”.

This fall comes after remittances to low and middle-income countries reached a record $1.1 billion (US$554 billion) in 2019, estimated to outstrip the level of foreign direct investment (FDI).

While remittance flows are expected to fall across all World Bank Group regions, the decline is expected to be 19.3 per cent in Latin America and the Caribbean.

Remittances flows into Latin America and the Caribbean grew by 7.4 per cent to $192 billion (US$96 billion) in 2019, with uneven growth across countries.

Remittances continue to be a vital source of income for developing countries, a point not unnoticed by David Malpass, World Bank Group president.

He said: “The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.

“Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”

Studies have shown that remittances help alleviate poverty in lower and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labour in disadvantaged households, according to the World Bank Group.

A fall in remittances affects families’ ability to spend on those areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs, it said.

The World Bank’s forecast in 2021 is for remittances to low and middle-income countries to rebound by about 5.6 per cent to reach $940 billion (US$470 billion).

“The outlook for remittances remains as uncertain as to the impact of the COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease,” the bank said.

It pointed out that while in the past remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship, this time the pandemic had affected all countries, creating additional uncertainties.

(marlonmadden@barbadostoday.bb)