In 2021, according to a World Bank report, 281 million immigrants sent around $751 billion to their families in their home countries, and this year the figures are going to increase. In 2022, remittances are expected to grow at 4.4 per cent, mainly due to a weaker growth outlook for the United States. Remittance costs: Sending $200 to the region cost 5.5 per cent on average in the first quarter of 2021, down from 6 per cent a year earlier. Even during the Covid-19 crisis, remittances kept steady. Among the key drivers in 2020 were migrants' desire to help their families by sending money home and drawing on savings. Despite the onset of severe recessions, many migrant workers have been able to keep earning income. They tend to be employed in essential businesses such as agriculture and construction that have not suffered as much during the pandemic.
Reasons for remittances
Remittances lift families out of poverty, improve health and nutrition conditions, increase education opportunities for children, improve housing and sanitation, promote entrepreneurship and reduce inequality. Remittances to Mexico surged 9.4% in the first eight months of the year. Pakistan is also experiencing a record increase, while cash transfers to such countries as Vietnam and the Philippines have held steady. In other parts of the world, remittances have also increased due to the war. According to new data from the National Bank of Ukraine, remittance flows to Ukraine surpassed $19 billion in 2021. These flows have proved to be resilient during the COVID-19 crisis since Ukrainian families are sending money back home to their relatives. The World Bank estimates that remittances to Ukraine will increase by 8% this year, with a significant probability of an even stronger rate of increase.
Expats in the US sending remittances to Mexico
According to the Migration Data Portal, in terms of remittance inflows per region, flows rose in Latin America and the Caribbean (6.5%) during the Covid-19 pandemic. The region is the one that receives more remittances nowadays. The United States is currently the largest source of international remittances globally, sending a total of $148 billion in 2017. Mexico received the largest portion of these remittances, accounting for more than $30 billion USD, making the U.S.-Mexico remittance corridor one of the largest worldwide. The whole town of Comachuen, a Purepecha Indigenous community of about 10,000 inhabitants in Mexico, survives because of the money sent home by migrants working in the United States. The remittances kept families fed after local woodworking sales dropped off a decade ago when pine lumber started to become scarce.
Expats story
The US data estimates there were 10.7 million irregular immigrants. Most of them aim to send money back to their families in their home countries, but without proper documents, they have been struggling. Tranquilino Gabriel reported to NPR about his conditions as an expat in the US, sending money for his family in Mexico. He used to work turning out decorative wood spindles on a primitive lathe. The 59-year-old resigned to work in the United States for as long as possible. He sends home about $7,500 each year from what he earns working the fields. That money is largely used to fund his children's education, paying private college fees, so his eldest son can be a registered nurse. “I am paying for their studies so that they don't have to do what we had to do,” Gabriel said.
Economy impact
Financial remittances have been an important developmental vehicle associated with migration for the countries which receive them. Financial remittance flows have steadily increased in volume from the 1990s to the present day. In 2017, migrants sent an estimated $466 billion to families in developing countries. Money sent home from abroad is shown to be more stable than both private debt and portfolio equity flows and several times larger than international development aid.
The United States was the most significant source country for remittances in 2020, followed by the United Arab Emirates, Saudi Arabia, and Switzerland. The US is in the top three source countries for remittance outflows in the current USD (68 billion). The cost of sending money across international borders remained high, around 6.4 per cent on average in the first quarter of 2021. That impacts the American economy negatively as expats work in the country, but part of their salaries don't stay in the US.
