Remittances to Asia Pacific slowing down
Remittances slowed in 2014 mainly due to exchange rate volatility, as remittances are reported in US dollars.
December 24, 2015
In the Asia Pacific region, total inward remittances amounted to more than $240 billion in 2014, a 6% increase from 2013. This represented a compound annual growth rate (CAGR) of 5% in 2012–2014, lower than the 9% received in 2010–2012. The slowdown in 2014 is mainly due to exchange rate volatility, as remittances are reported US dollars. The currency weakness in some host countries lowers the dollar equivalent of remittances, and migrant workers hold off from sending money home. Other factors such as economic growth and immigration policies in migrant destination countries also significantly impact remittances.
Remittances to most Asia Pacific countries have been growing at a slower pace over the past two years (Figure 1). India, the largest remittance-receiving country, has witnessed a sharp slowdown in inward remittance growth. Growth of remittance flows to countries like Bangladesh, Nepal, and Sri Lanka have also declined. Among the Asia Pacific nations, Indonesia and Malaysia have seen stronger remittance growth over the past two years, with the former growing by 13% in 2014.
Remittances to most Asia Pacific countries have been growing at a slower pace
The above mentioned inward remittance data excludes unrecorded flows. A substantial amount of remittances are sent through informal channels to countries with underdeveloped financial systems, such as Myanmar. Although Myanmar banks have been offering inbound remittance services in cooperation with financial institutions in other countries, Myanmar workers in Malaysia, Singapore, and Thailand still prefer informal channels. Formal channels are safer than their informal competitors. However, they are less convenient and more expensive.
India, China, and the Philippines have been the top remittance recipients, which will ...
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Keywords:Remittances, Middle East, Asia Pacific, GDP