News Americas, NEW YORK, NY, Thurs. April 23, 2020: Remittance flows to the Caribbean and Latin America region is also forecast to be impacted by the COVID-19 pandemic as the projected economic fallout from the virus continues to be revealed.
The World Bank yesterday said remittance flows to the LAC region are expected to fall by 19.3 percent this year, coming on the heels of a 7.4 percent increase last year.
In its ‘Migration and Development Brief 32: COVID-19 Crisis Through a Migration Lens,’ the Bank said the anticipated drop in remittances is likely to be sharper for LAC than other regions because the US, one of the region’s main remittance‐source country, has been hit hard by the pandemic.
This is due also to a loss of jobs, especially by many immigrants from this region. The latest U.S. data on total non-farm payroll employment reported a sharp decline of 701,000 individuals, reflecting the impact of COVID‐19 during the first two weeks of March 2020, the Bank’s report said. About two‐thirds of the drop was reported in leisure and hospitality, mainly in venues serving food and alcoholic beverages.
The news comes as the economic fall out in the region from the virus also begins even as many of these nations are dependent on remittances as part of their foreign direct investment. Haiti’s remittances for instance equal 37 percent of GDP, the largest ratio in the LAC region.
Studies show that remittances alleviate poverty in lower- and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labour in disadvantaged households. A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. “Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”