Flows in Remittances (DP IB Geography)

Remittances have increased from $126 billion in 2000 to $702 billion in 2020 and $794 billion in 2022

In 2022, the top five remittance-receiving countries were [in millions (M) of US dollars]:

• India: $100, 000M

• Mexico: $60,300M

• China: $51,000M

• Philippines: $38,000M

• Egypt, Arab Rep.: $32,337M

Low- and middle-income countries rely heavily on remittances to improve their economies

• Although India is the country benefiting the most from remittances, the $100 billion received provided just 2.9% of its 2022 GDP

• Tonga's main economy is tourism, but inward remittances of $250M amounted to 50% of its 2022 GDP

• Lebanon boosted its shrinking economy through $6.8 billion in remittances in 2022, estimated to be almost 38% of its GDP

The United States continues to be the top remittance-sending country, with a total outflow of $68 billion in 2020

Despite predictions of a decline due to COVID-19, 2020 saw only a slight drop (2.4%) from the 2019 global total

The actual size of the flow of global remittances is hard to estimate because of unrecorded flows of money through formal or informal channels

The advantage of remittances compared to other financial help is that remittances go directly to the family

Remittances provide direct financial support to families, helping them afford basic necessities and stay above the poverty line

Remittances allow investments in education, health, and entrepreneurship, which contributes to long-term poverty reduction

Remittances are used to improve housing and sewerage services

During economic downturns or disasters, remittances help prevent vulnerable populations from falling into poverty

The inflow of remittances has indirect multiplier effects on the local economy, stimulating growth and development

In some countries, remittances make-up a considerable portion of GDP, influencing economic stability

However, in some cases, remittances can lead to inequality within communities

The transfer of remittances from one country to another can be expensive and some money transfer companies charge the sender and receiver

In some countries, wages have been withheld by the employer and/or returned to the government, as was the case from the UAE to North Korea