Remittance flows to developing countries moderate in 2023, World Bank report reveals
After a period of strong growth in 2021-2022, officially recorded remittance flows to low- and middle-income countries (LMICs) slowed down in 2023, reaching an estimated $656 billion, according to the World Bank’s latest Migration and Development Brief. Despite the modest 0.7% growth rate, remittances remained a vital source of external finance for developing countries, helping to bolster current accounts and address food insecurity and debt issues.
In 2023, remittances surpassed foreign direct investment (FDI) and official development assistance (ODA), highlighting their importance in supporting economic and human development. The World Bank report notes that migration and resulting remittances are essential drivers of economic and human development, with many countries interested in managed migration to address labor deficits and skill gaps.
Regional growth varied widely, with Latin America and the Caribbean seeing the largest increase in remittance flows (7.7%), followed by South Asia (5.2%), and East Asia and Pacific (4.8%, excluding China). Sub-Saharan Africa experienced a slight decline of 0.3%, while the Middle East and North Africa saw a significant drop of nearly 15%, and Europe and Central Asia saw a 10.3% fall.
The report highlights the resilience of remittances and their importance for millions of people, with leveraging remittances for financial inclusion and capital market access enhancing the development prospects of recipient countries. However, sending remittances remains too costly, with the global average cost of sending $200 being 6.4% of the amount being sent, well above the SDG target of 3%. Digital remittances offer a lower cost of 5%, compared to 7% for non-digital methods, highlighting the benefits of technological advancements in reducing the financial burden on migrants.
The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector. Accurate data collection is essential to support the UN Sustainable Development Goals on reducing costs and increasing volume, but statistical data remain inconsistent and incomplete, with the global gap between inward and outward remittance flows widening due to informal channels such as migrants carrying cash by hand when they return home.
