{ "title": "The Impact of COVID-19 on Remittance Flows", "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh", "canonical": "https://www.imf.org/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh", "overlayPath": "/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/index.md", "summary": "The COVID-19 pandemic threatens to dry up remittance flows—a vital source of income for poor and fragile countries, writes Antoinette Sayeh and Ralph Chami", "authors": [ "Antoinette Sayeh", "RALPH CHAMI" ], "publishDate": "2020-06-01", "sections": [ { "heading": "Overview: role and scale of remittances", "content": "- Remittance flows to low-income and fragile states reached $350 billion as of 2018, surpassing foreign direct investment, portfolio investment, and foreign aid as the single most important source of income from abroad.\n- Remittances are private, countercyclical income transfers that insure families against income shocks by supporting and smoothing consumption.\n- A drop in remittances will heighten economic, fiscal, and social pressures on governments of low-income and fragile countries already struggling to cope." }, { "heading": "Transmission of shocks", "content": "- Remittances sync the business cycles of recipient and sending countries; shocks to host-country economies transmit to remittance-recipient countries.\n- For a recipient country that receives remittances representing at least 10 percent of its annual GDP, a 1 percent decrease in the host country’s output gap will tend to decrease the recipient country’s output gap by almost 1 percent.\n- Remittances represent more than 30 percent of GDP for some countries, led by Tajikistan and Bermuda at more than 30 percent.\n- According to the World Bank, remittance flows are expected to drop by about $100 billion in 2020, which represents roughly a 20 percent drop from their 2019 level.\n- Impacts on recipient economies:\n - Loss of an important source of income and tax revenue just when needed most.\n - Banks in migrant-source countries rely on remittances as a cheap source of deposit funding; reduced remittances will increase banks’ cost of operations and greatly reduce their ability to extend credit.\n - Credit-constrained private sector—mostly self-employed people and small and medium-sized enterprises—will lose remittance funding and face tighter bank credit conditions plus lower demand.\n- Labor-market and migration dynamics:\n - Migrant workers who lose employment are likely to reduce remittances and could lose resident status in host countries, leading to return migration.\n - Return of migrants could increase unemployment and strain fragile public health systems in origin countries, heightening social pressure and possibly fueling spillovers and refugee flows." }, { "heading": "Global threat and macroeconomic consequences", "content": "- This pandemic poses a greater threat to remittance-dependent countries than previous crises because it is global: recipient countries may face both capital outflows and drops in remittance flows simultaneously.\n- With global demand likely to suffer, remittance-recipient countries cannot rely on exports or tourism to offset the shock; currency depreciation will not spur demand for exports in this systemic crisis.\n- Currency weakness will worsen situations for low-income and fragile states with foreign-currency debt, depressing local demand and contracting local economies further." }, { "heading": "Policy implications and recommended actions", "content": "- Urgency: The crisis tightens fiscal constraints in migrant-source countries just as public-sector demands increase (pandemic response and economic support), making international support critical.\n- Rationale for rich countries’ engagement:\n - It is in rich countries’ interest to keep migrants in host countries to sustain services and reduce virus transmission risk associated with mass returns.\n - Infection rates are higher in rich countries and especially high among migrant workers; returning migrants risk importing infections to fragile health systems, which could create global spillovers.\n- Three key actions to take now:\n 1. Stabilize migrants’ employment opportunities in host countries.\n - Relief packages that target employment protection for citizens can also help migrant workers remain employed.\n - Action by host countries preserves remittance flows and helps advanced economies restore production faster.\n - Example policy: targeted assurances, wage support, or employer coordination to keep migrants paid so they can send money home.\n 2. Support countries receiving returning migrants to contain and mitigate outbreaks.\n - Donor countries must help with the cost of virus mitigation to lessen the severity of local crises and stave off spillovers.\n - Priorities include enhanced testing in urban areas and support for quarantine measures for returning migrants.\n - Managed returns could yield longer-term benefits if repatriated migrants bring savings and skills home.\n 3. Provide fiscal and balance-of-payments assistance through international financial institutions and donors.\n - Ensure vulnerable people reliant on remittances can access social insurance programs.\n - Advance the global effort to meet Sustainable Development Goal 10 by reducing the high cost of remittances to 3 percent." }, { "heading": "Key statistics and factual takeaways", "content": "- Remittances to low-income and fragile states: $350 billion as of 2018.\n- Expected remittance decline in 2020: about $100 billion, roughly a 20 percent drop from 2019 levels.\n- Sensitivity example: recipient countries with remittances ≥10 percent of GDP experience nearly a 1 percent drop in their output gap for a 1 percent decrease in host-country output gap.\n- Countries with remittances 30 percent of GDP include Tajikistan and Bermuda.\n\nIMF Finance & Development, \"The Impact of COVID-19 on Remittance Flows\" — Antoinette Sayeh and Ralph Chami, June 2020.\n\n---\n\n Content in this bundle\n\n- شرايين الحياة في خطر\n - شرايين الحياة في خطر (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - شرايين الحياة في خطر (PDF){rel=\"external\" type=\"application/pdf\"}\n- The Impact of COVID-19 on Remittance Flows – IMF F&D\n - The Impact of COVID-19 on Remittance Flows – IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - The Impact of COVID-19 on Remittance Flows – IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n- Una forma de sustento en peligro ● Finanzas y Desarrollo ● Junio de 2020\n - Una forma de sustento en peligro ● Finanzas y Desarrollo ● Junio de 2020 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Una forma de sustento en peligro ● Finanzas y Desarrollo ● Junio de 2020 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 处于危险中的生命线 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊\n - 处于危险中的生命线 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 处于危险中的生命线 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Wp12104\n - Wp12104 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Wp12104 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh" } ], "bullets": [ "[Markdown version](/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/index.md)", "[Structured JSON version](/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/index.json)", "[Bundle manifest](/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/bundle-manifest.json)", "Authors: Antoinette Sayeh, RALPH CHAMI", "Published: June 1, 2020", "Remittance flows to low-income and fragile states reached $350 billion as of 2018, surpassing foreign direct investment, portfolio investment, and foreign aid as the single most important source of income from abroad.", "Remittances are private, countercyclical income transfers that insure families against income shocks by supporting and smoothing consumption.", "A drop in remittances will heighten economic, fiscal, and social pressures on governments of low-income and fragile countries already struggling to cope.", "Remittances sync the business cycles of recipient and sending countries; shocks to host-country economies transmit to remittance-recipient countries.", "For a recipient country that receives remittances representing at least 10 percent of its annual GDP, a 1 percent decrease in the host country’s output gap will tend to decrease the recipient country’s output gap by almost 1 percent.", "Remittances represent more than 30 percent of GDP for some countries, led by Tajikistan and Bermuda at more than 30 percent.", "According to the World Bank, remittance flows are expected to drop by about $100 billion in 2020, which represents roughly a 20 percent drop from their 2019 level.", "Impacts on recipient economies:", "Labor-market and migration dynamics:", "This pandemic poses a greater threat to remittance-dependent countries than previous crises because it is global: recipient countries may face both capital outflows and drops in remittance flows simultaneously.", "With global demand likely to suffer, remittance-recipient countries cannot rely on exports or tourism to offset the shock; currency depreciation will not spur demand for exports in this systemic crisis.", "Currency weakness will worsen situations for low-income and fragile states with foreign-currency debt, depressing local demand and contracting local economies further.", "Urgency: The crisis tightens fiscal constraints in migrant-source countries just as public-sector demands increase (pandemic response and economic support), making international support critical.", "Rationale for rich countries’ engagement:", "Three key actions to take now:", "Remittances to low-income and fragile states: $350 billion as of 2018.", "Expected remittance decline in 2020: about $100 billion, roughly a 20 percent drop from 2019 levels.", "Sensitivity example: recipient countries with remittances ≥10 percent of GDP experience nearly a 1 percent drop in their output gap for a 1 percent decrease in host-country output gap.", "Countries with remittances >30 percent of GDP include Tajikistan and Bermuda.", "**شرايين الحياة في خطر**", "**The Impact of COVID-19 on Remittance Flows – IMF F&D**", "**Una forma de sustento en peligro ● Finanzas y Desarrollo ● Junio de 2020**", "**处于危险中的生命线 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊**", "**Wp12104**" ], "related": [ { "title": "شرايين الحياة في خطر", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/june/ar/sayeh.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/june/ar/sayeh.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/june/ar/sayeh.pdf", "mime": "application/pdf" } }, { "title": "The Impact of COVID-19 on Remittance Flows – IMF F&D", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/june/covid19-pandemic-impact-on-remittance-flows-sayeh.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/june/covid19-pandemic-impact-on-remittance-flows-sayeh.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/june/covid19-pandemic-impact-on-remittance-flows-sayeh.pdf", "mime": "application/pdf" } }, { "title": "Una forma de sustento en peligro ● Finanzas y Desarrollo ● Junio de 2020", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/june/es/impacto-de-la-pandemia-de-covid19-en-flujos-de-remesas-sayed.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/june/es/impacto-de-la-pandemia-de-covid19-en-flujos-de-remesas-sayed.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/june/es/impacto-de-la-pandemia-de-covid19-en-flujos-de-remesas-sayed.pdf", "mime": "application/pdf" } }, { "title": "处于危险中的生命线 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/fandd/article/2020/june/zh/sayeh.pdf", "summary": { "path": "/-/media/files/publications/fandd/article/2020/june/zh/sayeh.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/fandd/article/2020/june/zh/sayeh.pdf", "mime": "application/pdf" } }, { "title": "Wp12104", "role": "document", "sourceUrl": "https://www.imf.org/external/pubs/ft/wp/2012/wp12104.pdf", "summary": { "path": "/external/pubs/ft/wp/2012/wp12104.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/external/pubs/ft/wp/2012/wp12104.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/index.md", "json": "/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/index.json", "bundleManifest": "/en/publications/fandd/issues/2020/06/covid19-pandemic-impact-on-remittance-flows-sayeh/bundle-manifest.json" }, "generatedAtUtc": "2026-09-23T15:54:36.841Z" }