Remittances to Bangladesh slip as global inflation soar
Remittances to Bangladesh have underperformed this year even as the number of people moving to other countries rise. According to the central bank, remittances to the country dropped by 25% to $1.54 billion in September from $2.04 billion in August.
This decline made September the worst month for remittance inflow to Bangladesh. In total, the country has received more than $5.67 billion in this financial year. This was a light increase from the $5.41 billion that came in the previous year.
Global inflation blamed
Analysts believe that the slowing global economy and the red-hot inflation is to blame for the falling remittances. In the United States, inflation has surged to a multi-decade high of 8.5%.
The same trend happened in other European countries. In the UK, barring government subsidies on energy, inflation is expected to rise to over 18% in 2023. Meanwhile, in the European Union, consumer and producer inflation has jumped to the highest levels on record.
Therefore, this inflation has made many Bangladeshi immigrants to have less disposable income. Besides, most of them are employed in industries like hospitality where workers don’t earn a lot.
Another reason for falling remittances in Bangladesh is the forex exchange rate. The country’s central bank has fixed the exchange rate to Tk 108. In a statement, an economist told The Business Standard that:
“Efforts should be made to get increased remittances from new markets. Now that the Malaysian market has opened up a bit, South Korea is also showing interest. We should try to send more skilled workers there.”
Global remittances to grow
Meanwhile, the World Bank estimates that remittances will increase by 4.2% to $630 billion in 2022. This will be significantly slower growth than the 8.6% that remittances experienced in 2021.
Ukraine will be a key market for remittances due to the ongoing war. The bank estimates that the country will see a jump of 20% in 2022 as people living abroad send money back home. The bank said:
“Boosting social protection programs to protect the most vulnerable, including Ukrainians and families in Central Asia, as well as those affected by the war’s economic impact, is a key priority to protect people from the threats of food insecurity and rising poverty.”
Money transfer companies are reporting mixed results. For example, in September, Wise said that its business was doing well as the number of users rose to more than 7 million. On the other hand, firms like MoneyGram and Western Union are seeing slow growth.