According to the latest Migration and Development Brief, published by the World Bank on 26 June, international remittances to low- and middle-income countries (LMICs) grew by 0.7 percent in 2023 and is expected to grow at a pace of 2.3 percent in 2024.
The growth rate of remittances in 2023 was slower than in 2022, and this trend is expected to continue in 2024. The World Bank said that this slowdown is due to a number of factors, including weaker than expected economic growth in the high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.
Remittances are a crucial source of external finance for developing countries, and they help to mitigate the impacts of shocks such as food insecurity and debt. According to the World Bank, remittances surpassed foreign direct investment (FDI) and official development assistance (ODA) in 2023, and they are expected to continue to grow at a faster pace in 2024.
The growth of remittances in 2023 was highest in Latin America and the Caribbean (7.7 percent), followed by South Asia (5.2 percent), and East Asia and Pacific (4.8 percent), excluding China. Sub-Saharan Africa saw a slight decline of 0.3 percent, while the Middle East and North Africa experienced a nearly 15 percent drop, and Europe and Central Asia saw a 10.3 percent fall.
Despite the challenges, the report highlights the importance of remittances as a source of development finance for LMICs. The World Bank said that it is crucial to improve the collection and data on remittances in order to accurately track the actual volume of remittances and assess their impact on development.