Thursday, April 14, 2016

Nepal was the third largest remittance recipient in 2014

As a share of its GDP, Nepal was the third largest recipient of remittances in 2014 (see the latest Migration and Development brief by WB). Remittance inflows to Nepal amounted 29.2% of GDP in 2014. Tajikistan and Kyrgyz Republic received remittances amounting to 36.6% of GDP and 30.3% of GDP, respectively. In 2015, remittance inflows to Tajikistan and Kyrgyz Republic was $2.6 billion and $1.7 billion, respectively. In Nepal, it is estimated to be about $7 billion. 

The remittance inflows soared last year immediately after the earthquake and has been one of the most important income sources (sans faster government aid) of the earthquake-affected households. Increased inflows to finance daily household needs has been one of the most vital coping strategies of the affected households.



In 2015, Nepal received remittances from around 35 countries. The highest bilateral remittance inflows was from Qatar ($2.02 billion), followed by Saudi Arabia ($1.8 billion), India ($1 billion), UAE ($803 million) and the United States ($332 million). Qatar and Saudi Arabia absorbed about 124,368 and 98,246 migrants respectively in 2015. Malaysia was the most popular destination with 202,828 migrants in 2015, but the remittance inflows from Malaysia are lower than from other destination ($185 million). This probably might be due to the lower wages and less working hours plus the informal inflows. Or/and, the WB's estimation might have simply missed the realistic figures. For instance, remittances from Japan to Nepal are shown to be zero, but the money transfer agencies are doing brisk business (eg. Kyodai/IME Japan). Most of the countries waived remittance costs immediately after the earthquake, leading to a surge in inflows. 

Interestingly, India received $2.7 billion as remittances from Nepal in 2015. These bilateral remittance estimates are computed using data on migrant stocks, host country incomes and origin country incomes. Here is a cautionary note from the authors: "These are analytical estimates based on logical assumptions and derived from a global estimation of bilateral remittance flows worldwide. They are not actual officially reported data. The caveats attached to these estimates are: (a) the data on migrants in various destination countries are incomplete; (b) the incomes of migrants abroad and the costs of living are both proxied by per capita incomes in PPP terms, which is only a rough proxy; and (c) there is no way to capture remittances flowing through informal, unrecorded channels."


Here is a chart showing the migration and remittances trend after natural disasters.