Remittance reached a new height of $1.83 billion in June
Under the worst-case scenario of Covid-19 pandemic impact, Bangladesh’s remittances could fall by 27.8% in 2020, as job losses mounted and employers trimmed payrolls, says Asian Development Bank (ADB).
During the global financial crisis in 2009, which resulted in a 2.7% decline in overall remittance inflows to Asia and the Pacific, Bangladesh’s remittances received by households declined on average by 19.3%.
The Manila based regional lender’s research titled “Covid-19 Impact on International Migration, Remittances, and Recipient Households in Developing Asia” revealed it on Monday.
Under the worst-case scenario, Covid-19 impact on remittances ranges from a 5.2% decline from baseline remittances in 2018 for the least affected economy to almost a 30% decline for the most-affected, research findings showed.
Among developing Asian economies, the five worst affected countries are Nepal, where remittances could fall by 28.7%, Tajikistan 27.9%, Bangladesh 27.8%, Pakistan 26.8% and the Kyrgyz Republic 25.2% in 2020.
“With many households depending on international remittances in developing Asia—particularly in the Pacific and Central and West Asian economies—a sudden stop in remittance flow to these regions could push people into poverty," the ADB warned.
Bangladesh’s remittance inflow
As per Bangladesh Bank data, remittance inflow hit a new record of $18.20 billion in the FY20, although Covid-19 battered most of the global economies.
Remittance reached a new height of $1.83 billion in June.
However, the experts opined that the figure does not mean that Bangladesh will continue to retain the higher amount of remittance in the coming months.
“The migrants are sending their savings home as they fear returning they will have to return as employers are trimming jobs due to the pandemic. They also sent more on the occasion of Eid-ul-Azha,” Ahsan H Mansur, executive director of Policy Research Institute (PRI), told Dhaka Tribune.
Since the global economies are witnessing the impact of Covid-19 pandemic and migrant workers are returning home especially from Middle East countries, it would be a shock for our economy, said the economist.
He urged the government to provide financial support to the returned migrant workers to be self-employed or to utilize their expertise in local industry.
Remittance loss under the worst-case scenario (% of baseline)
Global impact on remittance under worst-case scenario
Assuming that economies take about a year to get their domestic outbreaks under control and bring economic activities back to normal, global remittances are expected to decline by $108.6 billion in 2020, equivalent to 18.3% of the baseline remittances globally.
Remittance receipts in Asia will fall by $54.3 billion, equivalent to 19.8% of the baseline remittances in 2018, while South Asia will record the largest fall, by $28.6 billion.
Meanwhile, the wide-scale economic cost of the Covid-19 is expected to reach between $5.8 trillion and $8.8 trillion globally, equivalent to 6.4% to 9.7% of global GDP, reflecting the spread of the pandemic to Europe, US, and other major economies.
Employment in host economies shrinking
The Covid-19 impacted economies around the world, including widespread unemployment and lower incomes. Toward the end of June 2020, workplace closures applied to 77% of country observations worldwide, albeit to a varying extent—nine countries still required strict closing of all but essential workplaces, said ADB.
The ADB estimates employment in Asia and the Pacific to be lower by as much as 167 million persons, while jobs cut in the region are reducing wage income, with estimates of the decline projected to range from $359 billion to $550 billion.
Employment in host economies of Asian migrants is contracting significantly. According to International Labour Organization (ILO), the negative effects on jobs are expected to have hit during the second quarter of 2020 in the Americas and in Europe and Central Asia, with working hours likely down by 18.3% and 13.9% in the quarter, respectively, relative to the quarter prior to the outbreak.
In Asia and the Pacific and Arab states, working hours are thought to have declined 13.5% and 13.2% in the quarter, respectively.
Provide access among migrant workers to compensatory benefits or other emergency relief and social protection programs targeted at Covid-19 affected workers in host countries, while assisting stranded, laid-off, or other distressed migrant workers and provide necessary humanitarian, health, legal, and administrative support, the ADB recommended.
In addition, use diplomatic missions to ensure welfare, wages, and benefits for migrant workers staying in host countries. Facilitate employment retention and placement, said the regional lender.
Facilitate convenient and safe processes in renewal of working permits and incentivize employers to retain migrant workforce as well as provide employment placement of laid-off migrant workers, it called for.
Ensure employment opportunities and foster entrepreneurship among repatriated migrant workers, while initiating online job matching of unemployed overseas workers and conduct training programs to enhance their employability, the ADB added.