The flow of remittances to low- and middle-income countries will increase by 4.2% in 2022 to $630 billion, according to the latest World Bank (WB) estimates, and of this total, 22%, or almost $143 billion, is expected to go to Latin America, and which is an annual increase of 9.1%.
According to the WB’s report, Russia’s war against Ukraine will have an impact on remittances.
“Remittances to Ukraine, the largest recipient in Europe and Central Asia, are expected to increase by more than 20% in 2022. However, remittance flows to many Central Asian countries, whose main source is Russia, will fall sharply,” the report states.
The bank warns that the impact on remittances, combined with rising food, fertilizer and oil prices, could increase the risk to food security and exacerbate poverty in many of these countries.
“The most important priority to protect people against the threat of food insecurity and increased poverty is to promote social protection programs to protect the population affected by the economic impact of war.”Michal Rutkowski, the World Bank's global director for social protection and jobs.
The report also states that, during 2021, remittance flows showed a marked increase in Latin America and the Caribbean (up by 25.3%), Sub-Saharan Africa (14.1%), Europe and Central Asia (7.8%), Middle East and North Africa (7.6%) and South Asia (6.9%).
Likewise, globally, the average cost to send $200 stood at 6% in the fourth quarter of 2021, which is more than double the 3% target set in the United Nations’ Sustainable Development Goals (SDGs).
“The cheapest region to send money to is South Asia (4.3%), while the most expensive is sub-Saharan Africa (7.8%),” according to the report.
“Reducing remittance fees by two percentage points would possibly generate $12 billion in annual savings for international migrants from low- and middle-income countries, and $400 million for migrants and refugees from Ukraine,” according to Dilip Ratha, lead author of the report on migration and remittances and head of the Global Knowledge Partnership on Migration and Development.
The report also states that remittance flows to Latin America and the Caribbean increased to $131 billion in 2021, a 25.3% increase over 2020, on the back of a strong recovery in employment of foreign workers in the United States.
“Among the countries that recorded double-digit growth rates in 2021 were Guatemala (35%), Ecuador (31%), Honduras (29%), Mexico (25%), El Salvador (26%), Dominican Republic (26%), Colombia (24%), Haiti (21%) and Nicaragua (16%).”
Finally, regarding Latin America, it explains that “overall, the average cost to send $200 to the region remained at 5.6% during the fourth quarter of 2021, unchanged compared to the percentage recorded a year earlier”.