AKIPRESS.COM - Remittances to low- and middle-income countries are projected to have grown a strong 7.3 percent to reach $589 billion in 2021. This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 percent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief released on November 18.

For a second consecutive year, remittance flows to low- and middle-income countries (excluding China) are expected to surpass the sum of foreign direct investment (FDI) and overseas development assistance (ODA). This underscores the importance of remittances in providing a critical lifeline by supporting household spending on essential items such as food, health, and education during periods of economic hardship in migrants’ countries of origin.

After falling 8.6 percent in 2020, remittance flows to Europe and Central Asia are projected to have grown 5.3 percent to $67 billion in 2021 due to stronger economic activity in the European Union and surging energy prices. Remittances are projected to grow by 3.8 percent in 2022.

Remittances are currently the largest source of external financing in the region. Inflows have been higher or equal to the sum of FDI, portfolio investment, and ODA in 2020 and 2021. As a share of GDP, remittances in the Kyrgyz Republic and Tajikistan stand above 25 percent. It is estimated that in 2021 the volume of money remitted by labor migrants to Uzbekistan will reach about $7.6 billion, or 11.6 percent of the country's GDP.

The average cost of sending $200 to the region rose slightly to 6.6 percent in the first quarter of 2021 from 6.5 percent a year earlier, largely reflecting a sharp increase in costs in the Turkey-Bulgaria corridor. Russia is one of the lowest-cost senders globally with costs falling from 1.8 percent to 1 percent.