DESPITE the COVID-19 pandemic, remittance flows to low- and middle-income countries remained resilient in 2020, reaching USD 540 billion in 2020, just 1.6 per cent below the 2019 total of USD 548 billion, according to the latest Migration and Development Brief released by the World Bank.

The decline in recorded remittance flows in 2020 was smaller than the one during the 2009 global financial crisis (4.8 per cent). It was also far lower than the fall in Foreign Direct Investment (FDI) flows to low- and middle-income countries, which, excluding flows to China, fell by over 30 per cent in 2020.

"As a result, remittance flows to low- and middle-income countries surpassed the sum of FDI (USD 259 billion) and overseas development assistance (USD 179 billion) in 2020," noted the Washington-based lender.

The main drivers for the steady flow included fiscal stimulus that resulted in better-than-expected economic conditions in host countries, a shift in flows from cash to digital and from informal to formal channels, and cyclical movements in oil prices and currency exchange rates.

The true size of remittances, which includes formal and informal flows, is believed to be larger than officially reported data, though the extent of the impact of COVID-19 on informal flows is unclear.

"As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable," said Mr Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank. "Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants."

Remittance inflows rose in Latin America and the Caribbean (6.5 per cent), South Asia (5.2 per cent) and the Middle East and North Africa (2.3 per cent). However, it fell for East Asia and the Pacific (7.9 per cent), for Europe and Central Asia (9.7 per cent), and for Sub-Saharan Africa (12.5 per cent).

With global growth expected to rebound further in 2021 and 2022, remittance flows to low- and middle-income countries are expected to increase by 2.6 per cent to USD 553 billion in 2021 and by 2.2 per cent to USD 565 billion in 2022.

Even as many high-income nations have made significant progress in vaccinating their populations, infections are still high in several large developing economies and the outlook for remittances remains uncertain.