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Global remittance transfers to decline 20% in 2020

Global remittance transfers to decline 20% in 2020

Mubasher: Countries most dependent on global remittance transfers will face credit risks in 2020 due to the expected drop in such inflows, according to Moody's Investors Service.

 Global remittances are set to decline by $110 billion or 20% in 2020, after reaching its highest levels at $554 billion in 2019.

Low and middle-income countries mainly depend on global remittance transfers for their economy; therefore, the growth of these economies will slowdown amid a decline in these transfers, Moody's senior vice president, Christian de Guzman, noted.

Among the most vulnerable countries to the 20% drop in remittances are Kyrgyzstan, Tajikistan, and El Salvador.

A total of 25 countries provide around 85% of global migrant remittance outflows, topped by 10 countries including many of the largest G-20 economies.

The coronavirus (COVID-19) economic repercussion witnessed by labour markets in these source countries, the deduction of wages, loss of employment, and travel restrictions will continue to put pressure on migrant labour.

On the other hand, most of the remittance-receiving countries are net oil importers; hence, they will benefit from the large decrease in oil prices since the beginning of 2020.

In this regard, Guzman said: "While the impact on incomes and economic strength is likely to be more gradual, the hit to current account receipts and weakening of external positions can be abrupt."