Bangladesh earned $21.75 billion from expatriates last year — an increase of 18.4% from 2019 — amid the Covid-19 pandemic
Remittance inflow to Bangladesh accounted for 6.6% of its GDP in 2020, making it the eighth largest remittance earner in the year, says a report by the Global Knowledge Partnership on Migration and Development (KNOMAD).
Bangladesh earned $21.75 billion from expatriates last year — an increase of 18.4% from 2019 — amid the Covid-19 pandemic.
This, along with a surge of remittance inflows to Pakistan, pushed up South Asia’s remittance earnings by 5.2% to $147 billion in 2020.
The KNOMAD report said that remittance flows remained resilient in 2020, registering a smaller decline than previously projected despite Covid-19.
As the coronavirus was tearing through the world in February last year, fear gripped Bangladesh that remittance, which has gone on to become one of the lifelines of the economy, would take a massive hit.
The inflow of remittance declined from February to April last year when the pandemic was putting down its roots all over the world.
But from May onwards, the inflows have been on the rise as countries all over the world gradually started to ease their movement restrictions.
Expatriate Bangladeshis sent $2.06 billion in remittance last month, up 89.17% year-on-year from last April.
Remittance inflow increased 39% to $20 billion in the July-April period of the current fiscal year, compared to the same period of the last fiscal year.
“The 2% cash incentive on remittance earning has played a vital role behind this,” said Bangladesh Bank officials.
“Last year, the inflow of remittance was very high as the migrant workers had sent more money to their relatives amid the pandemic to deal with the crisis period,” said Zahid Hussain, former lead economist of the World Bank’s Dhaka office.
He also said that the collapse of the informal channels like the hundi system — an illicit cross-border transaction network — thanks to the travel ban brought on by the pandemic was one of the reasons for the record remittance received in 2020 despite migrants returning home in hordes.
Zaid Bakht, research director of the Bangladesh Institute of Development Studies (BIDS), said that remittances would maintain a standard flow in the upcoming days as the migrant workers are already used to the legal channels and are enjoying the 2% cash incentive.
In Bangladesh, remittances showed a brisk uptick in 2020 at 18.4%, according to the KNOMAD report.
The report also said that in India, the South Asia region’s largest recipient country by far, remittances fell by just 0.2% in 2020, with much of the decline due to a 17% drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.
In Pakistan, remittances rose by about 17%, with the biggest growth coming from Saudi Arabia followed by the European Union countries and the United Arab Emirates, the report said.
Sri Lanka witnessed a remittance growth of 5.8%. In contrast, remittances to Nepal fell by about 2%, reflecting a 17% decline in the first quarter of 2020.
For 2021, it is projected that remittances to the South Asia region will slow slightly to 3.5 percent due to a moderation of growth in high-income economies and a further expected drop in migration to the GCC (Gulf Cooperation Council) countries, said the report.
The report showed that India has the highest position in inward remittance. The country received $83 billion as remittance last year, which was 3.1% of its GDP. China has the second position, who received $60 billion as remittance last year and followed by Mexico at $43 billion; the Philippines at $35 billion; Egypt at $30 billion; Pakistan at $26 billion; France at $24 billion, and Bangladesh at $22 billion.