Sharp slide in India’s remittance inflows on OECD slowdown

After growing by more than 24 percent to a record high of $111 billion in 2022, remittance flows to India are expected to grow by just 0.2 percent in 2023, according to the latest Migration and Development Brief from the World Bank. The report said remittances are likely to be affected due to slowing growth in the Organization for Economic Co-operation and Development (OECD) economies which limits employment and wage gains for migrants as well as diverting official remittances towards informal money transfer channels.

“The growth of remittance flows to South Asia in 2023 is expected to slow to 0.3 percent in response to the economic slowdown in OECD countries, especially the high-tech sector in the United States, which is affecting the demand for IT workers. It is expected that Remittances to India – which accounts for more than 60 percent of inflows into the region – are growing by only 0.2 percent in 2023. Remittance flows to the other six South Asian countries will be limited by demand for migrants in the GCC, where it is expected that The decline in oil prices leads to a slowdown in growth from 5.3 percent in 2022 to 3 percent in 2023, as well as the continuation of the transfer of official remittances to informal money transfer channels due to the deterioration of local economic conditions. The report said that remittance flows to low- and middle-income countries are expected to grow by 1.4 percent to reach $656 billion in 2023.

In 2022, India recorded a growth of more than 24 percent in its internal remittances to reach $111 billion, which is higher than the previous World Bank estimate of $100 billion. This represents 63 percent of remittance flows in South Asia, which grew by more than 12 percent in 2022 to reach $176 billion. “Approximately 36 percent of remittances in India are attributable to high-skilled, high-tech Indian migrants largely in three high-income destinations (US, UK and Singapore), where post-pandemic recovery has led to scarce labor market and wage increases.” that boosted conversions.”