There has been a slowdown in growth of remittances to Bangladesh — one of the lifelines of the country’s economy — fuelled mostly by the slow outmigration of migrants who returned home amid the Covid-19 pandemic, says a new report by the World Bank.
The “COVID-19 Crisis Through a Migration Lens”, the global lender’s November brief on global migration and development, says although remittances to Bangladesh rose above pre–pandemic and 2020 levels by almost 6 percent to reach $23 billion in response to the government’s tax cuts and other incentives in 2021, a slowdown in growth is distinct.
The remittance outlook for South Asia in 2022 seems uncertain, it says before adding that high-frequency data show signs of a slowdown in most countries.
In Bangladesh, slowing growth in remittances in the first nine months of this year already suggests downside risks for 2022, according to the World Bank.
India is once again the top recipient of remittances globally and in South Asia, followed by Pakistan in the region.
Despite the slowdown, Bangladesh has ranked seventh in terms of receiving money transferred by migrant workers in the world.
Remittances account for more than 6.5% of Bangladesh’s GDP and a downshift spells concern for the country.
Deployment of workers from Bangladesh to the Gulf Cooperation Council (GCC) region fell by 19% in the first three months of 2021 compared to the same period of 2020, says the World Bank report.
It states that a slowdown in the pace of visa/work permit issuance for the millions of returnees in the GCC countries, especially as some governments seek to promote employment of their own workers, is contributing to a depletion of the migrant stock. Consequences include lower remittance flows to South Asia and other regions in 2022 and the near term.
The situation in South Asia is especially uncertain. Migrants who returned to their home countries during lockdowns may not be able to return to their original jobs owing to tougher immigration regulations and issuance of worker visas.
Saudi Arabia issued 12% fewer work visas in the first quarter of 2021 relative to the same period in 2020, while Oman reported a 15% year-on-year decline in Bangladeshi workers in Q1 2021.
The future holds several challenges for less-skilled South Asian migrants in the medium term.
At least half of Bangladesh’s 5 million migrants in the GCC countries are less-skilled workers.
Currently, the average monthly remittance of a Bangladeshi migrant who performs manual work is $203 compared to $276 for a Pakistani and $396 for an Indian.
A hike in remittances from more-skilled Bangladeshi migrants may turn out to be an unexpected gain for Bangladesh and its migrants, says the report.
Remittance inflow to Bangladesh accounted for 6.6% of its GDP in 2020, making it the eighth largest remittance earner in the year.
Bangladesh earned $21.75 billion from expatriates last year — up by 18.4% from 2019 — amid the Covid-19 pandemic.
