Good News in Migration

A few months ago, I attended the World Bank's conference on Diaspora for Development, hosted by Dilip Ratha, lead economist at the World Bank. The general feeling at that time was that remittance flows would contract significantly this year, but, paradoxically, would become a more important source of external financing in many countries, as foreign direct investment had dropped by up to 50 percent.

Since then, the situation for migrants has improved. Today, the World Bank released its Migration and Remittance Trends 2009 report, which features several upward revisions in remittance flows. Dilip Ratha's People Move blog has the highlights:

Newly available data show that officially recorded remittance flows to developing countries reached $338 billion in 2008, higher than our previous estimate of $328 billion. Based on monthly and quarterly data released by some central banks and in line with the World Bank’s global economic outlook we estimate that remittance flows to developing countries will fall to $317 billion in 2009. This 6.1 percent decline is smaller than our earlier expectation of a 7.3 percent fall.

These higher remittance flows have come at a cost, however. Fewer migrants are returning home, and the overall migrant flow out of countries is slowing (though remains positive):

By now it is clear that existing migrants are not returning even though the job market has been weak in many destination countries; instead they are staying on longer and trying to send money home by cutting living costs. New migration flows are lower due to the economic crisis, but they are still positive. We maintain our expectation of a recovery in migration and remittance flows in 2010 and 2011, but the recovery is likely to be shallow.

Ratha highlights three main risks to remittance flows: a jobless economic recovery, tighter immigration controls, and unpredictable exchange rate movements.

The former and latter risks are likely to remain for some time (see here, here and here). Thus, much depends on the degree to which host countries direct the blame for their economic malaise (particularly joblessness) towards migrants. Fortunately, this hasn't been common thus far.