International migration is also known as the movement of people across international boundaries. Migration has enormous implications for growth and poverty alleviation in both origin and destination countries. In coming times, demographic forces, globalization, and climate change will increase migration pressures both within and across borders. Migration has a huge effect and serves as one of the main sources of remittance. Despite Covid-19, remittance flows in 2020 were smaller than the one during the 2009 global financial crisis which was 4.8 percent. This was also far below the drop in Foreign Direct Investment (FDI) flows to lowand middle-income countries which exclude the flows to China, which dropped by 30 percent in 2020. As such, remittance flows to low and middle-income countries surpass the sum of USD 259 billion and Overseas development assistance of USD 179 billion in 2020(The World Bank- Washington, May 12, 2021).
A staggering one billion people worldwide who is about one-seventh are involved with remittances. Every year, 200 million migrant workers send money home, and 800 million people benefit from this (JLIFAD). There are many reasons why remittance is important to migrant workers. To discuss a few of them is because remittance continues to provide a critical lifeline for the poor and vulnerable (Michal Rutkowski -Global Director of the Social Protection and Jobs Global Practise at the World Bank). Given its significance as a source of external financing for low and middle-income countries. The resilience of remittance flows is remarkable, it’s helping to meet families’ ‘’increased need for livelihood supports’’ said (Dhilip Ratha, lead author of the report on migration and remittances and head of KNOMAD). Remittance serves as an important source of income for a household in low and middle-income countries, where a family member is a migrant worker. This is because the money sent by migrant workers to their families and other individuals is typically spent in full on ‘’Gross Domestic Products’’ in their home countries.
Furthermore, over 50 percent of remittances are sent to households in rural areas, where 75 percent of them are the world’s poor and food-insecure live. These households rely on these flows for improving their livelihoods and increasing resilience. Overall, on a global scale, the accumulated flows to the rural areas are expected to reach about USD 3 trillion over the next five years. Hence, remittance is not only seen as a simple form of money transfer rather it is also seen as a way to improve the lifestyle of the low and middle-income earners as well as a contributor to improving economies. Moreover, about 75 percent of remittances are used to put food on the table and cover medical expenses, school fees, or housing expenses. In times of crisis, migrant workers are required to send more money to their homes to cover losses or family emergencies. The remaining 25 percent of remittances, representing over USD 150 billion per year can be saved or invested in asset-building activities that generate income and employment. Additionally, more than 70 countries rely on remittances for at least 4 percent of their GDP. As these countries demonstrate, remittances are an engine of socio-economic growth and transformation which is particularly for rural areas. (JLIFAD)
In Conclusion
Migrants are one of the most important contributors to remittances and money transfers across the globe. With over one-seventh of the world population involved with remittance activities, it shows how growingly important it is becoming. Southeast Asian countries consisting of many developing and underdeveloped countries generaterelatively more migrant workers which play a huge role in the country’s economy and Gross Domestic Product (GDP). Here at Lotus Remit, we have corridors in such countries in Southeast Asia such as Indonesia, the Philippines, India, and so on. We specialize in money transfer in this region and have a good system in place to help make the process more user-friendly and efficient. We are always focused on making the experience better for our clients in ways possible.