In addition to the health concerns of the global pandemic, Covid-19 has had a huge impact on the world economy. Many countries have completely shut down all economic activities, therefore directly affecting its laborers and those dependent on them. Migrant and foreign workers are among the most vulnerable and have felt the sting of lost hours and wages. Furthermore, their families at home also feel the affects since remittance payments have dropped worldwide. For those who are not supporting families outside the country, here are a few considerations of how this affects countries reliant upon foreign income.
Global Predictions for Remittance Payments
In poorer regions of the world, many people are dependent upon remittance payments from family members working abroad as a primary source of income. This money helps with daily living expenses, health care, education, and building a better future for their family. However, job losses due to Covid-19 are threatening many livelihoods.
Global remittance payments hit an all-time high in 2019 with an estimated $706 billion. Unfortunately, many foreign workers are employed in the service sector and not seen as essential employees. Furthermore, many of these workers are unable to return home due to travel restrictions. This means the steady cash flow has come to an abrupt halt. According to predictions from the World Bank, experts say this figure will drop by 20% this year. It is the most drastic decline in recent memory and is going to affect national economies in countries already struggling to cope with the pandemic.
Regions Where Remittance Payments Have Dropped
Even slight changes in policies have a huge impact over time. Keep in mind that many developing countries count on this income to sustain their economies. In the poorest countries, a few dollars a day can mean the difference between putting food on the table or going to bed hungry. For example, in countries like Nepal, Tonga and Haiti these remittance payments account for more than 29% of the national GDP. However, since the countries with the largest amount of outgoing cash are locked down, remittance payments have dropped worldwide.
Although the average global decline is about 20%, Europe and Central Asia (27.5%), Sub-Saharan African (23.1%), and Southeast Asia (22.1%) will be hardest hit. The drop in remittance payments is especially worrisome for countries with large refugee populations. Lack of income could become disastrous in areas already suffering from shortages of food and medical supplies.
Personal Experiences of Sending Remittance Payments
I am among the fortunate foreign employees that have been minimally impacted by the economic downturn. Since Taiwan got a handle on the coronavirus early on, the country never went into a full lock-down. Schools and businesses shut down for two weeks following Chinese New Year, but economic activities quickly resumed. However, I did notice a few additional fees and forms each time I sent my remittance payments back to the US.
As it turns out, I am now facing a similar predicament as other migrant workers around the world. Circumstances are now bringing me back to the US with few job prospects. Those remittance payments have come to a complete halt. Therefore, my financial future relies on what I have managed to save and luck finding other revenue sources. Hopefully new banking policies and technology will offer easier access and fewer fees to send remittance payments. Many people’s lives may depend upon it.