The average remittance inflow increased by 22.70 percent in the last 10 months of the current fiscal year, but the monthly growth rate appears on a declining curve due to global meltdown.
From July to April of the current fiscal year, remitters sent in $7,891.17 million, up from $6,430.94 million in the same period of last fiscal year.
Over the last 10 months, Bangladesh has recorded a $1,460 million or 22.70 percent rise from the same period of last fiscal year, according to Bangladesh Bank data.
The monthly growth rate soared to 53.40 percent in August.
September was the first month in the current fiscal year to suffer a decline in growth. The rate came further down to 9 percent in March. However, remittance growth was recorded slightly higher at 9.73 percent in April. The remittance inflow was $857.30 million in April.
“Although remittance growth showed a slightly upward trend in April, we cannot say it for sure that it will show an upward trend in the coming months,” said a high official of Bangladesh Bank.
“The global scenario has not yet changed. However, our overall remittance growth of 23 percent is not bad,” the official said.
In a report, the World Bank analyses Bangladesh’s remittance scenario: “Remittances have been a key driver of economic growth and poverty reduction in Bangladesh. The impact of the global financial crisis on remittances is of critical importance.”
In the past, global remittance flows have been stable, or even counter-cyclical, during an economic downturn in the recipient country, and resilient in the face of a slowdown in source countries.
“But the current crisis is global and the World Bank’s Global Economic Outlook projects a 4.2 percent to 7.3 percent decline in remittance flows to South Asia in 2009. If exchange rates remain unfavourable global remittance flows are likely to experience an even greater decline,” it said.
In Bangladesh, there is strong evidence that remittances are positively correlated with oil prices. The sharp and sustained decline in oil prices combined with the impact of the financial crisis in the banking sector is adversely affecting the construction boom in the Middle Eastern economies.
The WB warns that reduced growth in demand for migrant workers in the oil-rich Arab countries, which eventually could hurt Bangladesh’s remittance income.
“This together with immigration controls in destination countries could worsen remittance prospects,” it says.
The performance of countries under Gulf Cooperation Council (GCC) is particularly important. The bulk of Bangladesh’s remittances, about 63 percent, come from the Middle East, which hosts over 3.6 million Bangladeshi workers. A further 29 percent come from the US, UK and Germany.
The WB report quoted a private think-tank Refugee and Migratory Movement Research Unit (RMMRU), which estimates that Bangladesh may also face declines in remittance inflows from the UK and US.
Remittances from the UK may fall significantly as most of it derives from Bangladeshis engaged in hospitality and catering activities, which are highly susceptible to economic downturns.
Remittances from the US, sent mainly by small entrepreneurs and blue-collar workers (taxi drivers, restaurant staff, salespersons), may also decline due to the economic downturn.
The outflow of migrant workers is also slowing, according to the WB. A record number (1.7 million) of Bangladeshi workers have left the country in the last two years. Recently there has been a marked slowdown in the outflow of migrant workers.
The first nine months of fiscal 2009 (JulyMarch) saw a 25 percent decline in migrant workers employed abroad from 537,000 compared to 720,000 during the same period last year.
The outflow of Bangladeshi workers to GCC countries declined 16 percent from 407,000 in fiscal 2008 (Jul-Feb) to 342,000 in fiscal 2009 (July-Feb).
The outflow of migrant workers to Saudi Arabia, the most important destination for Bangladeshis, declined 84 percent in the same period. Saudi Arabia and Kuwait, which account for nearly 40 percent of total migrant workers from Bangladesh, have virtually stopped issuing new work permits.
Source: The Daily Star, 05 May 2009