Remittances projected to rise 2.5% in 2015: World Bank

Says depreciation of rupee may have boosted investment-oriented remittances to India

Remittances to India are projected to increase by 2.5 per cent this year, the World Bank has said in its latest report, even as weak economies in Europe, especially Russia, are slowing the growth of remittance flows. In 2014, India is estimated to have received remittances worth $70.3 billion. “Stronger remittance growth in India reflects improving economic prospects in the United States,” the World Bank said.

According to the Reserve Bank of India, about 35 per cent of remittances to India originate in North America, and another 35 per cent in the GCC countries. The Bank said the recent depreciation of the rupee might have boosted investment-oriented remittances to India.

The regional growth rate is projected to moderate to about four per cent over the next two years, as remittances to Nepal and Pakistan are expected to decelerate.

After the large inflows following the earthquake, while lower oil prices might reduce remittance inflows from the GCC countries eventually.

In its report, the Bank said remittances to developing countries are expected to reach $435 billion in 2015, registering a modest growth rate of two per cent from last year.

This represents a significant slowing in the growth of remittances from the rise of 3.3 per cent in 2014 and of 7.1 per cent per year from 2010 -13.

Global remittances, sent home from some 250 million migrants, are projected to grow by 1.3% to $588 billion.

Slowing remittances this year will affect most developing regions, in particular Europe and Central Asia where flows are expected to decline by 18.3% in 2015.

A weakening of the Ruble against the US dollar is the main cause of that decline, it said.

Looking to 2016, the report says remittances to developing countries are expected to rise by about 4%, reaching an estimated $453 billion, buoyed by the continuing recovery in the United States and a modest acceleration of economic activity in Europe.

Global flows of remittances are expected to recover in 2016 to reach $610 billion, and then rise to $635 billion in 2017.