Drop in global remittances hits families in poor countries

“A weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition,” says the World Bank’s Rita Ramalho.

To blame, says the bank: low oil prices and weak economic growth in energy-rich Gulf countries, Europe and Russia, which took a toll on flows to South Asia, Central Asia and sub-Saharan Africa. Bangladesh saw a drop of 11.1 percent, while flows to India fell 8.9 percent.

Overall, global remittances fell 1.2 percent to $575 billion in 2016, following a 1.7 percent drop in 2015. When transactions between high-income countries are excluded, money flows from foreign workers in rich nations to their poorer home countries saw an even sharper decline.

One bright spot: Latin America, which saw a 6.9 percent spike over 2015; senders took advantage of a strong U.S. labor market and beneficial exchange rate.

Digital currencies and mobile financial services are taking aim at high remittance fees, which average 7.45 percent.

This post originally appeared in ImpactAlpha's daily newsletter. Get The Brief.

Photo credit: humanosphere.org

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