Outlook for migration and remittances 2012-15 Dilip Ratha World Bank November 27, 2012 Development Prospects Group (DECPG) BBL Washington, D.C.
Outline Cyclical trends for 2012-15 Long-term structural trends Global knowledge partnership - KNOMAD
Main messages Remittances to developing countries $406 bn in 2012 ; $534 bn by 2015 Remittance costs averaging 7.5% in top 20 remittance corridors; 9% worldwide; US Remittance Transfer Rule will increase transparency for consumers Migration flows more responsive to economic cycle in host countries
Remittances to developing countries to reach $406 bn in 2012 600 $ billions 500 400 300 200 100 0 Source: Development Prospects Group, World Bank
Top remittance recipients in 2012 70 66 $ million, 2012e as % of GDP, 2011 47 31 29 27 23 22 21 21 18 18 24 24 21 18 14 14 9 7
Remittance flows to developing countries $ billion 2010 2011 2012e 2013f 2014f 2015f Developing countries 341 381 406 438 482 534 East Asia and Pacific 95 106 114 123 136 152 Europe and Central Asia 37 41 41 45 51 58 Latin America and Caribbean 58 62 64 68 75 84 Middle-East and North Africa 41 43 47 50 53 56 South Asia 82 97 109 118 130 144 Sub-Saharan Africa 29 31 31 33 36 39 Growth rate Developing countries 8.0% 11.7% 6.5% 7.9% 10.1% 10.7% East Asia and Pacific 10.9% 12.3% 7.2% 8.2% 10.5% 11.3% Europe and Central Asia 0.0% 13.1% -0.9% 9.6% 14.8% 13.1% Latin America and Caribbean 0.9% 7.3% 2.9% 7.6% 10.3% 11.0% Middle-East and North Africa 20.8% 6.3% 8.4% 5.5% 6.2% 6.8% South Asia 9.5% 17.7% 12.5% 8.7% 9.9% 11.0% Sub-Saharan Africa 4.9% 6.8% 0.0% 6.2% 8.7% 9.2%
Europe and Central Asia: Remittance Trends (y-o-y growth rate, %) 40% Percent Europe and Central Asia 20% 0% -20% Source: Development Prospect Group, the World Bank
Remittance outflows from Western Europe has decelerated 40% 30% 20% 10% 0% -10% -20% -30% -40% Growth in remittance outflows from Western European countries has been weak Italy UK Spain 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% Growth in remittance inflows to Eastern European countries has also been weak Bosnia & Herz. Romania Poland
Latin America and Caribbean: Remittance Trends (y-o-y growth rate, %) 40% Percent Latin America and Caribbean 20% 0% -20% Source: Development Prospect Group, the World Bank
Latin America and Caribbean: Remittance Trends (y-o-y growth rate, %) y-o-y growth rate of 3-month m.a. % 25 15 5-5 -15-25 Mexico El Salvador Honduras Guatemala Dominican Rep. Nicaragua Jamaica
In the US, employment is recovering faster for migrant workers than for natives* millions millions 24 124 Natives (left scale) 122 23 Migrants (right scale) 120 22 118 116 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 21 *3-month moving averages Source: Current Population Survey
However, unskilled migrants have been affected more than skilled and naturalized foreign-born workers in the US 40% Change in monthly average employment levels between Jan-Sep 2009 and Jan-Sep 2012 20% 0% Construction Accomodation/food services Trade Professional/tech. services Total Native-born Foreign born, non-citizens Foreign born, naturalized -20% Source: US Current Population Survey
Migrant employment is more responsive to Percentage points economic cycle than that of natives 5 4.2 Change in employment (Q1-2009 to Q4-2011) 0 2.3 German y 1.7 1.4 1.6 1.0 1.0 0.6 0.8 0.4 Australia USA Belgium Canada UK France Italy Spain Greece -0.7-1.1-1.2-2.1-1.9-3.3-5 Migrants Natives -5.4-6.3-10 -11.1-15 -14.3 Source: OECD International Migration Outlook 2012
Sub-Saharan Africa: Remittance Trends (y-o-y growth rate, %) 40% Percent Sub-Saharan Africa 20% 0% -20% Source: Development Prospect Group, the World Bank
Middle-East and North America: Remittance Trends (y-o-y growth rate, %) 40% 20% Percent Middle-East and North Africa 0% -20% Source: Development Prospect Group, the World Bank
Remittance growth declines in 2012 in most region 40% 20% Percent East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle-East and North Africa South Asia Sub-Saharan Africa 0% -20% Source: Development Prospect Group, the World Bank
Russia: Oil prices continue to provide a cushion for remittances to Asia $ billions 8.0 $/barrel 140 120 6.0 4.0 Crude oil price (right scale) 100 80 60 2.0 0.0 Remittance outflows from Russia (left scale) 40 20 0 Source: IMF Balance of Payments and Development Prospects Group, World Bank.
Exchange rate depreciation has created additional incentives to send remittances Local currency/us$ (July 2010 = 100 ) 120.00 Bangladeshi Taka 115.00 Indian Rupee 110.00 105.00 100.00 Mexican Peso 95.00 90.00
Remittance costs remain persistently high 10% Cost of sending $200 in top 20 largest bilateral remittance corridors 8% Simple Average 6% Weighted average 4% 2% 0% 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Source: World Bank Remittance Prices Worldwide database (November 2012)
Remittance costs remain persistently high 17% Cost of sending $200 from selected remittance source countries, Q3-2012 13% 14% 12% 4% 5% 5% 5% 5% 6% 7% 8% 8% 9% 2% Source: World Bank Remittance Prices Worldwide database (November 2012)
US Remittance Rule likely to increase transparency and competition The US Remittance rule may increase remittance cost in the short-run Improves transparency, and may spur competition in the industry
Mobile remittances promises to reduce costs, but growth is stymied by unclear regulation Lack of clarity and mandate of regulation appears to be a constraint to growth AML/CFT and the know-your-client requirements raise regulatory burden and costs
1. Monitoring, analysis, projection - Size, corridors, channels - Counter-cyclicality - Effects on poverty, education, health, investmen - Policy (costs, competition, exchange controls) 3. Financial access - Deposit and saving products - Loan products (mortgages, consumer loans, microfinance) - Credit history for MFI clients - Insurance products International Remittances Agenda 4. Capital market access - Private banks and corporations (securitization) - Governments (diaspora bonds) - Sovereign credit rating 2. Retail payment systems - Payment platforms/instruments - Regulation (clearing and settlement, capital adequacy, exchange controls, disclosure, crossborder arbitration) - Anti-money laundering/countering financing of terrorism (AML/CFT)
1. Monitoring, analysis, projection - IMF BPM6 3. Financial access International Remittances Agenda 4. Capital market access - Governments (diaspora bonds) 2. Retail payment systems - Costs - AML/CFT
Global Knowledge Partnership on Migration and Development (KNOMAD)
Objectives An open, multidisciplinary platform Generate a menu of policy choices based on evidence and peer-review Pilot policy operations and capacity building efforts
Data on migration and remittance flows Rural-urban migration and urbanization Migration and security Skilled labor migration Unskilled labor migration Climate change and migration MIGRATION AND DEVELOPMENT Integration issues in host communities Mobilizing other diaspora resources Demographi c changes and migration Migrant rights and social aspects Policy and institutional coherence Remittances
Outputs of Migration Knowledge Platform Analytical research products Operational toolkits, fact books Web-based anthologies, archives, blogs Best practices: A menu of policy choices for the policy makers Few pilot projects and capacity building activities
International Logo Competition
KNOMAD Activities Global Experts Meetings: Geneva Dec 3-4, 2012 Washington Dec 10-11, 2012 Workshop on BPM 6 compilation of remittance data Migration and Remittances Factbook 2013