The European debt crisis and rise in unemployment rates in high-income countries (which account for the bulk of remittance flows to developing countries) has negatively affected incomes of migrants and, in turn, their ability to send money home (for a more detailed discussion, see World Bank 2013a). Nevertheless, migrants appear to have absorbed these shocks to some extent and continue sending remittances to their family and friends in need. As a result, the value of remittances to developing countries rose to $401 billion in 2012, up 5.3 percent. or about half the 11.5 percent increase recorded in 2011. As a share of recipient-country GDP, remittances rose only 0.2 percentage point.
This aggregate story masks important differences across countries. For instance, the large number of migrants in the Arabian Gulf generated significant increases in remittance flows from the Gulf Cooperation Council countries—with the U.S. dollar value of remittances to South Asia and the Middle East & North Africa rising 12.3 and 14.3 percent, respectively. By contrast, developing regions that are more closely tied to high-income Europe (figure 11), where the protracted debt crisis has taken a severe toll on economic activity, experienced much weaker increases in remittances. Remittance flows to the developing Europe & Central Asia region fell 3.9 percent and increased 1.6 percent in Sub-Saharan Africa in U.S. dollar terms in 2012, following increases of 13.5 and 4.9 percent, respectively, in 2011. Flows to Latin America were hit especially hard by the continuing downturn in Spain, where the unemployment rate rose above 26 percent, forcing many Latin American migrants to return home. The dollar value of remittance flows to Latin America rose 0.9 percent in 2012, with absolute declines in some countries like Colombia (-2.3 percent) that have significant numbers of migrants in Spain.
Remittances continued to expand in 2012, broadly in line with developing country GDP
Source: World Bank
The U.S. dollar value of remittance flows to developing countries is projected to increase 6.7 percent in 2013 and to gradually firm to a 10.2 percent rate of increase in 2015, reflecting a modest easing in oil prices and a gradual strengthening of growth in high-income countries. Despite the increases in nominal terms, flows are projected to remain broadly stable when expressed as a share of developing countries’ GDP.