ISTANBUL

Remittances slowed in 2023, but they are expected to grow faster in 2024, the World Bank said in its latest Migration and Development Brief report released Wednesday.

"After a period of strong growth during 2021-2022, officially recorded remittance flows to low- and middle-income countries (LMICs) moderated in 2023, reaching an estimated $656 billion," it said in a statement.

"The modest 0.7% growth rate reflects large variances in regional growth, but remittances remained a crucial source of external finance for developing countries in 2023, bolstering the current accounts of several countries grappling with food insecurity and debt issues," it added.

The World Bank noted that remittances surpassed foreign direct investment (FDI) and official development assistance (ODA) last year.

Remittances to LMICs are expected to grow at a faster rate of 2.3% in 2024, although this growth will be uneven across regions, it said.

Downside risks to those estimates include weaker than expected economic growth in high-income migrant-hosting countries, volatility in oil prices, and currency exchange rates, it added.

"Migration and resulting remittances are essential drivers of economic and human development,” said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

"Many countries are interested in managed migration in the face of global demographic imbalances and labor deficits on the one hand, and high levels of unemployment and skill gaps on the other," she added.

Last year, remittance flows increased most to Latin America and the Caribbean with 7.7%. It was followed by South Asia at 5.2% and East Asia and the Pacific with 4.8%, excluding China.

"The resilience of remittances underscores their importance for millions of people,” said Dilip Ratha, lead economist and lead author of the report. “Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries."