Sunday, 4 January 2009

2008 Year End Reflection: The Rise and Fall of Remittances

-By Sunchild

The year just ended and we expect that governments, financial sector, international organisations, researchers and others involved in remittance data collection are burning the midnight candle to find out how much money sent by their migrant workers in 2008. So, did remittances in 2008 increase or decrease?

We have to wait until The World Bank issues the official figures. It might be too early yet to predict but it seems that we can divide the remittance receiving countries now into two main groups: those which receive less remittances and those which received more.

What is the trend? Obviously, those hardly hit are mostly countries where the bulk of migrants live in the United States for example, Mexico and Jamaica.

But remittances sent by migrants from Dominican Republic, Peru, and Columbia who are based in Spain are also lesser in 2008. Remittances in Tajiskistan, Poland and Moldova also slowed down. Many argued that the decrease is due to the global economic crisis. But which migrant receiving countries are having acute financial crisis?

Countries in Asia are faring well so far, so good. Inflows in the Philippines, Bangladesh, and Vietnam remains stable.

It seems that the positive impact of the global financial crisis is the changing attitude of remittance senders and receivers alike.
Remittances are fine as long as they last. For some who have not prepared for the economic crisis might be a little too late to think about savings and investment but as the old adage goes "better late, than never". Some governments realized the importance of remittance to the nationl economy. Central Bank Governor, Ajith Nivard Cabraal announced that Sri Lanka will give incentives to expatriate citizens to bring their saving home in the form of higher interest rates and lower taxes.

However, in the Philippines jokes are going around. Filipino migrnats send more money in time of economic crisis. Filipino migrant workers prefer to do more with little money or take extra jobs than slice back the amount they send to their families. If this is the case, in the Philippines, remittances are indeed countercyclical.

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