India's Remittance Inflows Expected to Slow Down to 0.2% Growth in 2023: World Bank Report

India's Remittance Inflows Expected to Slow Down to 0.2% Growth in 2023: World Bank Report

 

1. India's remittance inflows growth is projected to slow down to just 0.2% in 2023, according to the World Bank's Migration and Development Brief.

2. Remittances are viewed as a critical financial inflow, especially in the aftermath of the Covid-19 pandemic.

3. Slower growth in OECD economies, particularly in the high-tech sector in the United States, is impacting the demand for IT workers and potentially diverting formal remittances to informal channels.

4. Lower demand for migrants in the Gulf Cooperation Council (GCC) countries, due to declining oil prices, is further affecting remittance inflows to India.

5. The high base effect from 2022, where India experienced over 24% growth in remittances, will significantly impact the growth rate in 2023.

6. High-skilled Indian migrants in high-income destinations like the US, UK, and Singapore account for around 36% of India's remittances.

7. Remittance inflows from GCC countries contribute approximately 28% to India's total remittance inflows.

8. In 2022, India recorded more than 24% growth in remittances, reaching a record-high of $111 billion, surpassing earlier estimates.

9. India represented 63% of South Asia's remittance flows in 2022, with the top five recipient countries being India, Mexico, China, the Philippines, and Pakistan.

10. The projected slowdown in remittance inflows growth emphasizes the need for policymakers to address factors such as reducing remittance costs, stimulating remittance flows, and adapting to changing economic conditions in key destination countries.

 

India's remittance inflows growth is projected to slow down significantly in 2023, according to the World Bank's Migration and Development Brief. The expected growth rate for remittances in India for the year is just 0.2%. This news is significant because remittances are an essential source of foreign exchange and financial support for many countries, particularly in South Asia. In India, remittances accounted for only 3.3% of GDP in 2022.

Several factors contribute to the anticipated slowdown in remittance growth. First, there is slower economic growth in OECD economies, particularly in the high-tech sector in the United States. This slowdown has affected the demand for IT workers, potentially leading to a diversion of formal remittances to informal money transfer channels.

Second, there is lower demand for migrants in the Gulf Cooperation Council (GCC) countries. The decline in oil prices has negatively impacted economic growth in these nations. As a result, there is reduced demand for foreign workers, which could further impact remittance inflows to India.

Lastly, the high base effect from 2022 is expected to have a significant impact on the growth rate of remittances in 2023. In 2022, India witnessed a remarkable growth of over 24% in remittances, reaching a record-high of $111 billion. However, this high base will make it challenging to sustain such high growth rates in the following year.

The top sources of remittances for India are high-skilled Indian migrants in high-income destinations such as the United States, the United Kingdom, and Singapore, accounting for approximately 36% of India's remittances. Additionally, remittance inflows from GCC countries make up about 28% of India's total remittance inflows. The recovery from the pandemic, tight labor markets, wage hikes, and favorable energy prices in these regions have contributed to increased remittance flows.

In 2022, India experienced significant growth in remittances, surpassing the World Bank's earlier estimate. The country recorded over 24% growth, reaching $111 billion in inward remittances. India accounted for 63% of South Asia's remittance flows in 2022. The top five recipient countries for remittances were India, Mexico, China, the Philippines, and Pakistan.

Overall, the projected slowdown in remittance inflows growth in India for 2023 has important implications for the country's economy and its reliance on these financial inflows. It highlights the need for policymakers to explore measures to stimulate and sustain remittance flows, reduce remittance costs, and adapt to changing economic conditions in key destination countries.

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