The South Asian Region is typically known for its scrumptious cuisines, deeply rooted cultures and exquisite topography. The people of this region are considered to be warm, hard-working and friendly; it is, therefore, not surprising that every year, we see thousands of people migrating from the region to different countries abroad, as well as within the region.
This migration trend has been seen for years now and has a direct impact on the remittances that come into the region. In 2014, South Asia received $116 billion in remittances, a 4.5 percent increase from the previous year, with the money coming in primarily from the GCC. Four of the top 10 remittance receiving countries are in this region; India tops the list at $70 billion, followed by China at $64 billion, Pakistan stands on the 7th position at $17 billion, followed by Bangladesh on the 8th position with $15 billion. Most countries, housed in South Asia are developing ones and remittances are a vital source of funds for them, far exceeding official development assistance and even foreign direct investment (excluding China). Remittances to Nepal, Bangladesh, Pakistan and Sri Lanka exceeded 6 percent of the GDP and 75 percent of reserves in 2013 (Source: World Bank Report).
South Asian countries enjoy higher international remittances as compared to other countries because the average cost of sending remittances to South Asia is the lowest, at 5.74 percent, as of Q2 2015 (Source: Remittance Prices Worldwide, World Bank). The report also states that the global average cost of sending remittances is way higher at 7.68 percent.
This year, the remittance growth in South Asia is projected to remain flat at 3.7 percent in 2015. The region continues to witness an increasing demand for migrants to support large scale construction activities in GCC countries such as the 2022 FIFA World Cup in Qatar and Expo 2020 in Dubai. Also, the improving economic prospects in the United States will result in increased migration to that part of the world as well. Going by these statistics, South Asia will continue to lead the remittance industry and clock in billions as remittances, in the years to come.
Written by – Arvind Mylar, Vice President – Business Development, MEASA & CIS, Xpress Money