World Bank Predicts 20% Crash In Global Remittance Which May Be More Than $445BN
This year 2020, due to coronavirus (COVID-19) pandemic, the global economy has slow-down to its worst, and this will result in around 20% retraction in global remittance which may be up to 445 billion dollars, as predicted by the World Bank. On 22 April 2020, the World Bank published a report “World Bank Predicts Sharpest Decline of Remittances in Recent History” regarding the prediction of the most significant drop in global remittances.
Rise In Global Remittances Stopped By Coronavirus Pandemic
There are a lot of migrants around the globe who have been sending money to their home in recent decades which was playing a vital role in the economies for many low-income countries. But this year due to interruption of the economic structure at global parameters due to the COVID-19 pandemic has also affected the money flow from high economic countries to the middle and low economic countries. As per the expert’s analysis, the World Bank has forecasted that this might drop by 20% this year 2020, which would be the largest ever drop in remittances in the century of global remittance.
Last year in 2019, the foreign direct investments are about to become the most significant source of capital to the middle and low economic countries which accounted to be around 8.9 percent of GDP in these low-income countries. But as global travel has stopped and all the industries are under lockdown situations. All the regions have been affected due to the crash of global remittance. The largest affected region is Europe and Central Asia, which are predicted to drop by 27%, followed by 23% in Africa, 22% in South Asia and 20% in Middle East countries. The lockdown situation across the world has forced the local shops to provide services to cut open hours, making the usual money transfer routes inaccessible. According to Dilip Ratha, the lead economist for remittances and migration at the World Bank, The amount of money going through them does not make up that much share of economic activities of remittance sending countries and can’t be categorized as essential services in most of the countries.
The oil price crash will also affect the remittance from the Gulf countries like the United Arab Emirates and Saudi Arabia which was to be one of the biggest exports of remittances with foreign workers of low and middle-income countries.
The foreign direct investments are expected to fall by 35%, and the stock and bond markets might drop by 80% this year 2020.
World Bank Remittance Prediction Offers Poor Outlook For Cryptocurrency Firms
The cryptocurrency industry has established a significant footprint in the economic sector, with an average cost of sending 200 dollars at 6.8% and goes up to 9% in regions like Africa. But due to the weak outlook predicted by the World Bank for many blockchain industries. Crypto firms that are specialized in cross border payments are also struggling to make a meaningful impact on the sector of remittance.