Remittances into Mena dip 3.8% to $64 billion in 2022

MUSCAT, JULY 8

Remittance inflows into countries of the Middle East and North Africa (Mena) fell by 3.8% to $64 billion in 2022 after posting strong growth of 12.2% in 2021, according to a key report.

Economies in the region that saw slight gains in remittance flows included several Maghreb countries. In 2023, remittance inflows are projected to grow by 1.7% with the outlook differentiated across regional subgroups depending on dominant host countries and the degree of exposure to higher inflation and financial volatility. Sending $200 to the region cost on average 6.2% in the fourth quarter of 2022, down from 6.4% a year ago.

The World Bank's latest Migration and Development Brief focuses on remittance flows to low- and middle-income countries (LMICs), with a specific emphasis on the Middle East and GCC countries.

According to the report, officially recorded remittance flows to LMICs are estimated to grow by 1.4% to reach $656 billion in 2023. However, economic activity in the remittance source countries is expected to soften, which may limit employment and wage gains for migrants.

In 2022, remittance flows experienced significant growth, with an 8% increase to $647 billion. This growth was driven by several factors, including strong oil prices in the GCC countries, large money transfers from Russia to Central Asian countries, and a robust labour market in the United States and other advanced migrant destination economies. Remittance inflows in different regions varied: East Asia and the Pacific grew by 0.7%, Europe and Central Asia saw a remarkable 19% increase, Latin America and the Caribbean experienced an 11.3% growth, South Asia saw a growth of 12.2%, while Sub-Saharan Africa grew by 6.1%. However, remittance inflows to the Middle East and North Africa region declined by 3.8%.

The top five recipient countries for remittances in 2022 globally were India, Mexico, China, the Philippines, and Pakistan. Notably, remittance inflows played a significant role in funding current account and fiscal shortfalls in countries where they represented a substantial share of GDP. Examples of such economies include Tajikistan, Tonga, Lebanon, Samoa, and the Kyrgyz Republic.

Remittances have become crucial for countries and households, particularly during the post-Covid period of slower economic growth and reduced foreign direct investments. They serve as a resilient source of external financing, especially for LMICs burdened with high levels of external debt. The World Bank recognizes the importance of remittances and actively works on facilitating their flow, reducing associated costs, and leveraging them for development purposes.

Looking ahead, the World Bank projects that remittance inflows to the Middle East and North Africa region will grow by 1.7% in 2023. However, the outlook varies across subgroups within the region, depending on dominant host countries and exposure to inflation and financial volatility. The average cost of sending $200 to the region was 6.2% in the fourth quarter of 2022.

In conclusion, remittances play a crucial role in the Middle East and GCC countries, providing external financing, supporting households during times of need, and contributing to economic development.