• Global remittances are expected to fall by 20% this year -- the biggest decline in history
  • Remittance flows to the East Asia and Pacific region are projected to fall by 13% this year
  • Philippines received $35.1 billion in remittances last year

The global pandemic and relate job losses and business shutdown have made it difficult, if not impossible, for tens of millions of migrant laborers to send money home. As a result, some poorer nations, especially in South and Southeast Asia which depend heavily on these remittances, will see a sharp drop in these vital funds.

The World Bank said in a recent report that global remittances are expected to fall by 20% this year -- the biggest decline in history. This decline would represent “a loss of a crucial financing lifeline for many vulnerable households,” the World Bank noted.

Remittance flows to the East Asia and Pacific region are projected to fall by 13% this year from $147 billion in 2019, which means more hardship for millions of people in Philippines, Vietnam and Indonesia.

"The slowdown is expected to be driven by declining inflows from the United States, the largest source of remittances to the region," the World Bank said. "Several remittance-dependent countries ... could see households at risk as remittance incomes decline over this period."

In the Philippines, remittances are equal in size to 9.9% of the country’s gross domestic product.

Philippines received $35.1 billion in remittances last year – almost equal to the remittances received by regional neighbors Indonesia, Malaysia, Thailand and Vietnam combined.

About one-third of remittances sent by overseas Filipinos came from the U.S.

The Philippines' Department of Labor and Employment stated that nearly 90,000 Filipinos working overseas were “either displaced or on a no-work, no-pay status due to lockdowns and slowdown of businesses in host countries."

Vietnam also depends heavily on foreign remittances, which is equivalent to 6.5% of GDP. About one-half of these funds came from the U.S., which is now only beginning to start a partial reopening of some businesses.

“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. “Remittances help families afford food, healthcare, and basic needs.”

Indonesia, as an overwhelmingly Muslim country, depends heavily upon remittances from the Middle East, which is now suffering from an oil glut and historic low oil prices.

Some 43% of Indonesia's total remittances come from its workers in the countries of the Gulf Cooperation Council -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

The World Bank emphasized the crucial importance of remittances in Asia.

"In several countries across the region, over three-quarters of poor households rely on remittances to complement their own earnings... a substantial share of households in East Asian and Pacific countries could be at risk of seeing this important source of income decline during this period [of crisis]," the World Bank stated.

South Asia – notably India, Pakistan and Bangladesh – also depend heavily upon foreign remittances.

But World Bank estimates that remittances to South Asia will plunge by 22% to $109 billion in 2020, following a 6.1% increase in 2019.

Abu Hyder, a Bangladeshi immigrant Uber driver in Queens, N.Y., will not be able to send any money to his parents for Ramadan the first time in 12 years,

"I am devastated, and what is worse is that I don't know when I will be able to send them money again," he said.

The COVID-19 crisis has created some heretofore unknown problems. For example, even if a migrant worker has money to send back home, he might not be able to find a remittance agency that is open to serve him.

"We find that families that receive remittances are reliant on remittances for at least 50% of the household income. Losing that amount of income obviously has a massive impact on your home," said Michael Newson, a senior labor mobility and human development specialist with the International Organization for Migration.

"It is a matter of time before poor families are not able to afford to buy things anymore," said Dilip Ratha, lead economist, migration and remittances at World Bank. "Remittances ... provide basic means of livelihood, buying food, shelter, housing, clothing, medicine, and healthcare, sending children to school. Remittances are probably affecting a third, or maybe half of humanity. This is not small change or a side show.”

The World Bank further warned: "The outlook for remittance remains as uncertain... In the past, remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship back home. This time, however, the pandemic has affected all countries, creating additional uncertainties."