MercoPress. South Atlantic News Agency

Remittance flows to developing countries forecasted to drop 7.3% in 2009

In Latinamerica the fall is estimated in 6.9%, mainly because of the slowdown of the construction industry in the US

Remittance flows to developing countries are expected to be 304 billion US dollars in 2009, down from an estimated 328 billion in 2008, said the World Bank Monday, releasing a new migration and remittances brief to coincide with an International Diaspora and Development Conference running from July 13-14.

The predicted decline in remittances by 7.3% this year is far smaller than that for private flows to developing countries. According to the World Bank, remittances are relatively resilient because, while new migration flows have declined, the number of migrants living overseas has been relatively unaffected by the crisis.

However, sources of risk to the outlook include uncertainty about the depth and duration of the current crisis, unpredictable movements in exchange rates, and the possibility that immigration controls may be tightened further in major destination countries.

”There is a risk that rising unemployment will trigger further immigration restrictions in major destination countries. Such restrictions would curb remittances more than forecast and would slow the global recovery in the same way as protectionism against trade would endanger a global upturn,” explained Hans Timmer, Director of the World Bank’s Development Prospects Group.

Remittances have slowed in many corridors since the last quarter of 2008. In line with a recent downward revision in the World Bank’s forecast of global economic growth, the new update (2009-2011) highlights the impact of the present financial crisis on the remittance flows and, describes broad regional and country specific trends.

Remittance flows to Latinamerica have been falling in large part because of a slowdown in the US construction sector. The new forecasts show a 6.9% decline in remittances for the Latinamerica and Caribbean region. However, flows to South Asia and East Asia have been strong; but remittances are expected to decline somewhat in 2009.

India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries.