The World Bank predicts that remittances to middle- and low-income nations will increase by 2% to $639 billion in 2023, falling from 4.9% growth last year. This means that contrary to popular belief that remittance trends might go upward in 2023, migrants will make fewer money transfers to their home countries as compared to 2022.

This article explores the predictions for 2023 remittance trends in different parts of the world.

Why are remittances important?

Remittances are recognised as a lifesaver for many struggling families and communities in underdeveloped nations by the Sustainable Development Goals (SDGs) of the United Nations. Family food needs, access to healthcare, a good education, and access to clean water and sanitation are all directly met through remittances. In contrast to foreign aid, remittances are sent from one home to another, making them a crucial and effective tool for speeding up poverty alleviation. Indeed, the claim that remittances reduce poverty in developing nations is backed by substantial and unequivocal evidence.

Through investment and financial access, remittances can positively affect GDP. Remittances can aid in the emergence of self-employment in a typical developing country where labour supply is plentiful, but chances for official work are few. By easing credit restrictions, which are typical in the unorganised sector of developing nations, remittances can promote the development of new small-scale businesses and entrepreneurial development.

On Average, remittance growth of 10% is correlated with a 0.66 percent permanent boost in GDP.

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Will Remittance Trends go upwards in 2023?

The remittance trends in 2023 will greatly vary from region to region. Countries with most migrants working in top-class firms will definitely have the edge over countries with lesser migrants abroad and mostly working as labour. However, collectively it has been assumed that 2023 will see a small drop as compared to 2022’s remittance growth.

That's bad news for remittance-dependent countries in Central America, the Caribbean, Africa, and regions of Asia. El Salvador, Nepal, and Lebanon are among the nations where such contributions make up more than a fifth of the annual GDP.

Reason for the predicted decrease in remittances

According to a report by the World Bank Group, recession in the richest economies in the world is the major reason for decreased remittances. This slowed-down growth will impede migrants' capacity to send money back to their families in the upcoming year.

The cost of living is increasing for migrants due to inflation in goods like food and fuel, which also reduces their ability to send money abroad.

The cumulative consequences will be seen in 2023 due to rising food inflation and the fact that the stimulus packages provided by many governments are also weakening now.

Remittance trend predictions for Pakistan

Remittances to Pakistan are anticipated to increase by 8% in 2023. Remittance flows to Pakistan surged by 20 per cent to $31 billion in 2021 but only by 2.2 per cent to $22 billion in Bangladesh. Government incentives, migrant support for their families back home, and inflows meant for Afghan refugees in Pakistan all contributed to this gigantic remittance growth.

Remittance trend predictions for Bangladesh

Only a 2% increase in remittances is anticipated for Bangladesh. This closely resembles the trend seen in 2021, when the number of remittances received increased by 2.2% to $22 billion. Over the last eight months, the monthly remittance has rapidly decreased. Remittance growth for the final quarter of 2022 and the first few months of 2023 is only expected to be 2%. 

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Remittance trend predictions for India

Due to the global headwinds, India, which is on course to become the first nation to receive more than $100 billion in remittances annually this year, will take the lead in next year's slower rate of global remittance growth by experiencing a fall.

It has been predicted that as high-income country GDP growth continues to stagnate, reducing migrants' salary gains, remittance growth will decline to 2% in 2023 for India. Remittance growth for all of South Asia is predicted to decline from 3.5% in 2022 to 0.7% in 2023.

Remittance trend predictions for Zimbabwe

Remittances have hastened the poverty reduction process in Zimbabwe, where as of 2019, almost 82.80% of the population lived below the poverty line.

The World Bank's most recent 2022 year in-review states that remittances to Sub-Saharan Africa increased by an estimated 5.2% to $53 billion in 2022. This was a good 16.4% increase from the previous year. However, as many countries experience tough economic circumstances in global and regional settings, remittances are anticipated to slow to 3.9% growth in 2023.

How to save money while sending money abroad in 2023?

The declining trends in the FX market and rising inflation indicate that sending money back home can be financially burdensome for expats, particularly if they opt for bank transfers. Plus, the increased transfer fees have also become a reason for the slowed remittance growth.

Banks and other financial entities purposefully maintain low and static exchange rates and charge a high percentage of the amount as transfer fees. In 2023, it is preferable to continue using online money transfer services for the most affordable remittance transfer. 

ACE Money Transfer is your solution for affordable remittance transfer

ACE Money Transfer is the leading remittance transfer firm operating in a global network since 2002. Despite the inflation and economic crisis, ACE has continued to provide affordable service to millions of returning users. Even in 2023, ACE does not plan on increasing its charges, making it the most affordable way to securely transfer funds to your family.

The remittance trends might slow down in the upcoming year as a result of the current global economic and political situation. Online money transfers through ACE are the best choice for sending remittances. Sign up today for no cost at all.