Page 26 - GEORptJul20

5.1.3​ Capital flows
Slump in remittances to be twice as deep in CEE/Eurasia as during Great Recession
Global remittances are heading for the worst slump in recent history, with a decline of around 20% forecast this year, a new World Bank report says.
Sharp economic contractions brought on by the coronavirus (COVID-19) pandemic and lockdowns aimed at containing the spread of the virus are anticipated in many countries around the world, including in Central and Eastern Europe (CEE) and Eurasia, at least for the first half of this year.
Migrant workers are particularly vulnerable to such economic crises in their host countries, points out the World Bank.
Globally, remittances to low and middle-income countries (LMICs) are projected to fall by 19.7% year on year to $445bn this year, according to the World Bank report​ ​COVID-19 Crisis through a migration lens​.
The Europe and Central Asia region is forecast to face a considerably worse contraction than the global average, at -27.5% compared to 2019, with the value of remittance payments falling from $65bn in 2019 to $47bn in 2020, and only slightly recovering to an anticipated $49bn in 2021.
This contraction is almost twice as severe as the one seen in 2009, the peak of the last international economic and financial crisis, when remittances to the region fell by 14.7% y/y.
Given the ongoing crisis, this is particularly damaging for LMICs, which are set to lose out on other sources of external financing such as foreign direct investment (FDI), which the World Bank expects to decline by over 35%.
The Europe and Central Asia region contains some of the world’s most remittance-dependent countries. In 2019, remittances equalled 29.2% of GDP in Kyrgyzstan, making it the most remittance-dependent economy in the world. It was closely followed by neighbouring Tajikistan, where remittances accounted for 28.2% of the year’s GDP.
26​ GEORGIA Country Report ​July 2020 ​ ​www.intellinews.com