Global money transfers reached $653bn (£538bn) in the past year, a rise of 60 per cent over the last 10 years as economic trouble hits countries.
Research by remittance provider ACE Money Transfer said the rise began as the world recovered from 2008’s global financial crisis in 2011-2012, with remittances important in aiding developing countries in times of global economic stress.
The current global economic situation, with slowing growth, dampened outlook, and soaring inflation, highlights their importance.
“Remittances have a massive impact on people’s lives across the world,” said ACE Money Transfer CEO Rashid Ashraf. “When times are tough and economies are struggling, this is when remittances are particularly important.”
Money transfers from foreign workers back to their home countries are essential for basic needs like food and medical costs. In particular, remittances play a crucial part in supporting troubled economies like Sri Lanka, Pakistan, Nigeria and Nepal.
Remittances to Sri Lanka and Pakistan, have risen to record highs over the past year as both South Asian countries struggle with soaring inflation and debt.
Remittances to Sri Lanka’s hit $7.1bn in the past year, up from $6.7bn the previous year, with money transfers to Pakistan climbing 26 per cent to a record $33bn in the past year. Remittances help support the countries’ economies.
The global economic slump is expected to hit low-income countries the worst, with remittance income more than triple that of both official aid and foreign direct investment, ACE Money Transfers said, citing the World Bank, IMF, and the UN.
“Remittances are a crucial source of foreign capital for many developing countries. Unlike other flows of private capital, remittances have remained resilient throughout the pandemic,” ACE Money Transfers said.
“As economics across the world continue to recover, remittances continue to play a vital role in helping countries build resilience and drive economic growth”