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New year; New outlook: Global remittances are expected to grow moderately in 2019

The remittance industry has consistently witnessed change. It is undergoing a paradigm shift from the traditional brick and mortar model of business to digitised methods of money transfer. Looking back it would be safe to say 2018 ended on a positive note as remittance flows across the globe were buoyant. As fin-tech gains a stronghold in the global remittance industry, key players upped their game to avoid being eclipsed by disruption and digitisation.

Reflecting on the remittance industry’s performance in 2018, the World Bank in its Migration and Development Brief concluded that remittance flows to low and middle-income countries (LMICs) significantly increased by 10.8% in 2018 compared to 2017. It is estimated to amount to $528 billion in 2018. A fall in oil prices had affected the remittance flows to LMICs in 2016, however not only were remittances to LMICs buoyant in 2017 but they continued to increase through 2018. A strong economy, a favourable employment situation in the United States, general socio-political stability and a rebound in outward flows from Gulf Cooperation Council (GCC) countries and the Russian Federation were tailwinds that kept remittances in 2018 on a positive upswing. However the World Bank forecasts moderation as the buzzword for remittances in 2019. Remittances to LMICs in 2019 are expected to grow moderately by 4% to reach an estimated $549 billion in 2019.

Remittance flows rose in all regions throughout 2018. Europe and central Asia recorded 20% increase in remittance flows while South Asia witnessed 13.5% rise. Sub-Saharan Africa saw 9.8% increase, Latin America and the Caribbean recorder 9.3 % increase in remittance flows while the Middle East and North Africa were at 9.1% increase and East Asia and the Pacific recorded 6.6% increase in remittance flows. Backed by economic tailwinds and favourable policies the World Bank estimates global remittances (including outflows to high-income countries) to be around $689 billion in 2018. With remittances expected to perform moderately in 2019, global remittances are expected to grow by only 3.7% to $715billion in 2019.

Remittances are highly susceptible to vulnerability of oil prices, restrictive migration policies and economic headwinds but fin-tech is here to stay. Transformation will be a constant within the remittance industry in 2019. Digital remittances formed a substantial part of global remittances in 2018 and are likely to reach a new high by 2023.

Just like any other industry, all the supply in the world cannot rescue a business if there is no demand. As the years unfold, the remittance industry would be dealing with millennial customers who thrive on digital experiences and live digitally savvy lives.  It will not be too long before customers demand a holistic digital experience within money transfer and remittance players will have no choice but to deliver. Work has already begun within the industry as transformation and innovation from a fin-tech perspective have already taken centre stage.  The penetration and wide acceptance of mobile wallets within the remittance space has also paved the way for transformation of traditional remittances.

Going digital is bound to change the landscape of the remittance industry. The key highlight of transformation and innovation within remittances will be the impact on exorbitant transfer charges that plague many countries today.   According to the World Bank’s Remittance Prices Worldwide Database, transfer fees to LMICs continued to be 6.9% in the third quarter of 2018. Remittance costs for South Asia were lowest at 5.4% while Sub-Saharan Africa recorded highest average cost at 9%. Undoubtedly the remittance industry has a long way to go to reduce remittance costs to 3% by 2030 if it hopes to meet the United Nations Sustainable Development Goal. While technological advances will help in mitigating transfer fees, it is only when the peril of exclusive partnerships is addressed that the industry as a whole will move forward in making remittances sustainable, affordable and inclusive.

2017 was a year of exuberance and expectations for the remittance industry. 2018 saw remittances mirror the exuberance and expectations through robust remittance flows across regions. Against the backdrop of a slowdown in manufacturing activity and trade deceleration, moderate global growth is expected in 2019. This trend is likely to reflect in moderate growth within the remittance industry too, in 2019.



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Sudhesh Giriyan

Sudhesh Giriyan


Xpress Money

Member since

25 Oct 2017



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