This is even as remittances to the developing world are expected to grow by 6.3 percent this year to $414 billion and are projected to cross the half-trillion mark by 2016, according to revised estimates and forecasts issued by the World Bank.
Other top recipients for 2013 are India (with an estimated $71 billion), China ($60 billion), the Philippines ($26 billion), Mexico ($22 billion), and Egypt ($20 billion). Other large recipients include Pakistan, Bangladesh, Vietnam, and Ukraine.
India and China alone will represent nearly a third of total remittances to the developing world this year. Remittance volumes to developing countries, as a whole, are projected to continue growing strongly over the medium term, averaging an annual growth rate of 9 percent to reach $540 billion in 2016.
Global remittances, including those to high-income countries, are estimated to touch $550 billion this year, and reach a record $707 billion by 2016, says the Bank’s Migration and Development Brief.
The estimates reflect recent changes to The World Bank Group’s country classifications, with several large remittance recipient countries, such as Russia, Latvia, Lithuania and Uruguay no longer considered developing countries. In addition, the data on remittances also reflects the International Monetary Fund’s changes to the definition of remittances that now exclude some capital transfers, affecting numbers for a few large developing countries like Brazil.
“These latest estimates show the power of remittances. For a country like Tajikistan they constitute half the GDP. For Bangladesh remittances provide vital protection against poverty. In terms of volume, India, with $71 billion of remittances, tops the global chart. To put this in perspective, this is just short of three times the FDI it received in 2012. Remittances act as a major counter-balance when capital flows weaken as happened in the wake of the US Fed announcing its intention to reign in its liquidity injection program. Also, when a nation’s currency weakens, inward remittances rise and, as such, they act as an automatic stabilizer,” said Kaushik Basu, Senior Vice President and Chief Economist of the World Bank.