Slowing remittance growth

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Macroeconomic overview

Remittances are the single largest source of international payments for several Central Asian, SEE and SEMED countries. However, in 2012 the annual growth rate of remittances declined in all but four countries (see Chart M.9). Egypt, Jordan and Tunisia were among the exceptions, which is consistent with past evidence that migrants from SEMED countries remit more in times of economic hardship.¹

Remittances are most important for the economies of Tajikistan, Kyrgyz Republic and Moldova, where their shares of GDP are 46 per cent, 29 per cent and 23 per cent respectively. Remittance growth slowed in all three countries in 2012, but still remained relatively high. The collapse of remittances from Russia was one of the principal channels through which the 2008-09 crisis affected these and other EEC and Central Asian countries. Consequently, a Russian economic slow-down poses a significant risk. However, higher-frequency data show no evidence that remittances from Russia to EEC and Central Asian countries weakened in the first half of 2013.²

In the SEE region remittances have yet to return to pre-crisis levels and the year to mid-2013 saw further contractions. The negative growth in all SEE countries reflects the large percentage of remittances which come from the eurozone periphery. Outflows from Greece, Italy and Spain have dropped substantially since their economies went into recession. Albania has been especially vulnerable, given its dependence on remittances from Greece, which saw a 19 per cent decline in 2012 alone.

1. See Bouhga-Hagbe (2006). [back]
2. Based on bilateral data from the Central Bank of Russia on remittances from Russia to EEC and Central Asian countries through money transfer operators.. [back]

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