MICROFINANCE SUMMARY: “Resilience: The COVID-19 Crisis Through the Lens of Migration; »Posted by Global Knowledge Partnership on Migration and Development (KNOMAD)
This brief provides an overview of recent trends in global migration and remittances. Overall, remittances to low- and middle-income countries (LMICs) remained relatively stable during the onset of the COVID-19 pandemic, increasing from $ 548 billion in 2019 to $ 540 billion in 2020. From many countries have used “a countercyclical fiscal policy. ”To stimulate their savings, which moderated the depth of recessions and kept incomes high enough that remittances did not fall precipitously. Countries with an oil-based economy have seen larger declines in remittances due to lower oil prices. In Russia, the double effect of falling oil prices and the depreciation of the local currency led to a 10% drop in remittances to Central Asia and Europe. At the same time, a “flow shift” from informal unregistered channels to formal channels, including FinTech providers, may have moderated the decline in measured remittance flows.
Stimulus programs in major economies have helped personal incomes and consumption remain stable while allowing businesses to retain employees during times of declining income. As a result, economies in North America and Europe with large migrant populations fared better than expected, significantly moderating the pandemic’s effects on remittances.
World Bank and KNOMAD staff predicted that remittances to LMICs will increase 2.6% to reach $ 553 billion in 2021 and similarly to $ 565 billion in 2022. However, these figures can be sensitive. the scale of current and future COVID-19 epidemics, and the shift from informal to formal channels.
The authors comment positively on certain policy responses, notably the inclusion of migrants in economic assistance and vaccination programs in some countries. They argue for the expansion of this assistance to other countries, perhaps through funding from international donors.
Meanwhile, the authors are arguing for efforts to reduce the cost of remittances, which averaged around 6.5% in the last quarter of 2020. Although these costs may be reduced thanks to the news technologies, innovation can be thwarted by “the fight against money laundering and the fight against the financing of anti-terrorism regulations (AML / CFT) and risk reduction practices of banks.” One of the common barriers for migrants is the lack of the identification documents required to use financial services.
This is a summary of an article published by KNOMAD under the title Migration and Development Brief 34; May 2021; 56 pages; available at https://www.knomad.org/sites/default/files/2021-05/Migration%20and%20Development%20Brief%2034_1.pdf
By Bradley Shulman, Research Associate
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