Tough Outlook for Remittances in 2021, According to World Bank Forecasts

The remittance sector has seen a decline in 2020, with Western Union, MoneyGram, and Ria experiencing high single-digit revenue drops over the ten months of the year. This decline can be attributed to several factors, including the weakened global economy, the continuing weak oil price, and the global job market's instability.

The World Bank's initial forecast for 2020 predicted a 20% decline for the sector, but the actual impact has not been as severe as initially projected. For 2021, the World Bank forecasts a continued decline in the sector.

The World Bank's 2021 forecasts are based on two main factors. One of these factors is the number of migrants with income to remit home. Fewer migrants with income to send home is a factor in the sector's decline, as remittances play a significant role in supporting many economies, particularly in developing countries.

Another factor that may contribute to inaccuracies in the World Bank's 2021 forecasts is the oil price's impact on the migrant economy. The weak oil price, particularly in the Middle East and Russia, has had a significant impact on the remittance sector.

The World Bank predicts nearly $100bn of flows will be wiped out of the market from the highs of 2019 in 2021. However, the exact extent of the inaccuracy in the World Bank's 2021 forecasts is uncertain. The World Bank's forecasts do not include total cross-border principal estimates, but rather revenues for Western Union, MoneyGram, and Ria.

Despite the forecasted decline, the World Bank's 2021 forecasts do not specify the decline percentage for 2021. The World Bank's forecasts for 2021 may be inaccurate due to the high level of uncertainty.

Despite the challenges, the World Bank's 2021 forecasts do indicate a recovery and growth in the remittance market. The World Bank forecasts that global remittance flows will increase after the decline in 2020 due to the COVID-19 pandemic, with significant remittance volumes especially from countries like the USA. For example, remittances from migrants in the USA to their home countries reached about $73.55 billion in 2021.

In conclusion, the remittance sector has experienced a decline in 2020 due to several factors, including the weakened global economy, the continuing weak oil price, and the global job market's instability. The World Bank's 2021 forecasts indicate a recovery and growth in the remittance market, but the exact extent of the decline in 2021 and the accuracy of the World Bank's forecasts remain uncertain.