While many countries have been able to recover relatively well since the global recession, the financial crisis is deepening in certain parts of the world. Despite this, remittances have proven to be largely immune to these fiscal issues, international officials recently stated.
According to the World Bank, money transfer transactions grew by more than 12 percent last year to $372 billion, higher than the initial estimate which was released earlier this year. In addition, given the robust flow of remittances through the first half of 2012, transfers could hit $467 billion two years from now.
Despite the vitality of remittances, the report said that several factors still affect the market.
"Persistent unemployment in Europe … is affecting employment prospects of existing migrants and hardening political attitudes toward new immigration," the report stated. "There are risks that if the European crisis deepens, immigration controls in these countries could become even tighter. Volatile exchange rates and uncertainty about the direction of oil prices also present further risks."
These most recent comments were added to an annual report which was released earlier this year by the World Bank.
Should the European crisis become more of an issue, the impact on remittances may be lessened through governmental actions that can make immigration easier. The World Bank released a book on migration and remittances in June, advocating for the removal of burdensome restrictions on mobility. By doing so, this could make any further deepening of the world's financial crisis more tolerable, as more immigrants would be able to work in other countries like the U.S. so that they can send money home to their families.
With the U.S. unemployment rate stuck at 8.2 percent, some immigrants who are already in the country or who are considering moving here may be worried that they will have difficulty finding a job. But according to the Conference Board, many businesses are hiring.
Recently, the Conference Board reported that online advertised work vacancies rose by 232,000 in June to more than 4.9 million jobs.
June Shelp, vice president at the Conference Board, noted that online labor demand posted an increase in 44 of the 50 states last month, with some of the largest gains coming in the West, specifically Nevada, Arizona and Colorado. Many people who have emigrated from Mexico take up residence in these states. Florida has a large Hispanic population as well. There, online labor demand jumped by 15,000, as there was a sizable increase in online ads for various jobs such as for nurses, truck drivers and elementary school teachers.
Metropolitan localities also fared well in June, as 20 of the country's largest metro areas witnessed labor demand creep northward. In just about half of these localities, many people have been successful in finding work, as the Conference Board says there were approximately two unemployed workers for every online advertised vacancy.
As an Indian immigrant whose family still resides there, your ability to send money to India is likely a major aspect of your life, as it may be their primary form of income to use for daily expenses. That said, you were probably frustrated to hear the reports indicating that Indian officials were planning on taxing non-resident Indians for the remittances they sent home.
But according to multiple news reports, any suggestion that a tax will be imposed is inaccurate.
In recent days, rumors had been swirling that Indians who were working overseas would soon be issued a tax levy of nearly 12.40 percent when they transfer money abroad. The speculation took on a life of its own when it was reported that Indian officials were mulling whether or not they wanted to implement the tax soon or impose them at a later date.
These speculations came to a grinding halt, however, when India's prime minister, Manmohan Singh, was informed of them.
"Prime Minister [Singh] has dismissed reports that the government is planning to charge 12.36 per cent on all foreign remittances to India," said Oommen Chandy, Kerela chief minister, recently told reporters. "He has assured status quo on the service tax issue."
Reports indicate that officials within the Indian government had discussed the possibility of installing a tax on foreign remittances as a means of boosting India's economy. Experts, however, were quick to cite that the tax would likely do more harm than good and could wind up impacting millions of Indians working abroad.
Bikram Singh Majithia, affairs minister for non-resident Indians, told reporters that the move would send mixed signals to expatriates.
"On one hand, we are luring NRIs to invest in [the] country and become part of India's economic growth," said Majithia. "The service tax on remittances by them to their parent country would discourage them to help [the] country with their remittance."
According to World Bank data, India is the world's largest recipient of foreign remittances, as approximately $64 billion worth were sent last year alone.
Despite the considerable amount of revenue from Indians and other people who send money online, India's economy has yet to take off. The World Bank says that India's gross domestic product – which is the total value of goods and service produced in a given year – slowed.
World Bank experts say one of the reasons why India's economic is lagging largely relates to a lack of infrastructure, particularly road development. In addition, strict rules and regulations imposed by the government have discouraged private investment, preventing the country from obtaining some of the financial means to kickstart its economy.
Pawn shops are a great resource to buy and sell things or get a short-term loan, and based on a recent survey, many are using these types of stores to send money to their families who still live in their native country. As a new poll indicates, this is particularly common among Filipinos.
According to a recent poll conducted by Bangko Sentral ng Pilipinas, approximately three in every four – 72 percent – of Filipinos surveyed said they had gone to a pawn shop location, such as Cebuana Lhuillier within the last year not only to buy and sell things but also to pay bills and conduct remittance business.
Nestor Espenilla, deputy governor for the BSP, told reporters that pawn shops are known for a lot of things, but up to now, some may not have realized that they can occasionally be used as a resource to send and receive money.
"The way pawn shops have been used to access financial services is transformational," said Espenilla.
He added that while a variety of branches are available in the Philippines, pawn shops serve as an additional location many people rely on to obtain their international wire transfer.
If you've been in the U.S. for any amount of time, you've likely seen a pawn shop in your area. According to statistics gathered by History.com, there are approximately 12,000 pawn shops in the U.S. alone. Further, with an estimated 25 million Americans not having a bank account, people will often go to pawn shops if they want to obtain a short-term loan.
Xoom knows that pawn shops can be a very convenient location for many to receive money sent by their friends and family abroad, which is why it has partnered with more than 1,600 Cebuana Lhuillier locations to allow for cash pickup. Many other locations are also available for cash pickup or bank deposit.
Or, if door-to-door delivery is more convenient, that can be arranged as well. Rush delivery is available to people who live in the Metro Manila area at no extra cost. What's more, your recipient may get their money within six hours or less.
Remittance flows to Mexico fared quite well last month, thanks to more people in the country being the recipients of an online money transfer, a new report indicates.
According to the Bank of Mexico, remittances from Mexicans living abroad jumped nearly 8 percent in May when compared with the same month last year.
Not only was the sheer volume of remittances more significant – as just under 7.1 million transfers were made in the month, up from 6.8 million in May 2011 – but the overall value of them rose as well. The central bank reported that remittances totaled $2.34 billion overall, a fairly significant rise from the $2 billion worth in the previous month. That means that through the first five months of the year, close to $10 billion of remittances have been sent, a clear indication that people have gone out of their way to send money to Mexico.
As for what the average value was for the typical money transfer, the Bank of Mexico said it was $329.21, slightly higher than year-ago levels and well within the total that Xoom enables its users to send.
If remittances continue to flow at their present pace, there’s a strong likelihood the total could outpace what was sent in 2011, as Dow Jones Newswires reports that $22.7 billion was sent to Mexico last year. The news agency also reports that remittances last month primarily emanated from the U.S., as many Mexicans left their native country to pursue employment opportunities on behalf of their families. Remittances typically bring in more money than tourism.
Wherever the money came from, though, more remittances will no doubt come as welcome news for the country, which has experienced some hard times economically and is still in the midst of a recession, despite being the second largest economy in Latin America.
Based on a report from the National Council on Evaluation of Social Development Policy, the World Bank reports that the number of Mexicans currently living in poverty rose by more than 3 million people between 2008 and 2010. This means that of Mexico’s 52 million people, just under half – 46.2 percent – are impoverished.
One positive development that has transpired in the intervening years as the country recovers economically are the number of people who are are dealing with more serious forms of poverty, which the World Bank defines as making less than $980 pesos a month. The dollar equivalent of that is about $76 a month. The number of people in this state fell from 10.6 percent of the population to 10.4 percent, or what equals roughly 11.7 million Mexicans. Even one person in poverty is too many, but this is a positive indication that people are doing better financially.
Statistics from the World Bank indicate that in 2011, Mexico mounted a moderate recovery, with its gross domestic product reaching an average of just under 4 percent. As the year continues, economists forecast that growth will likely average slightly less than that, but its success with exporting manufactured goods should prevent the growth rate from falling below 3.3 percent.
Between 1948 and 2012, the U.S. unemployment rate has averaged 5.8 percent, a number that suggests many people have been able to find work. In more recent years, however, that number has skyrocketed, as since January 2009, the nation's unemployment rate has been at or above 8 percent.
Despite this, companies continue to seek individuals who can adequately fill open positions. And if a recent remittance flow report is any indication of who's being hired, these people are often Filipino.
According to Bangko Sentral ng Pilipinas, thanks to Filipinos taking advantage of job openings, money being sent home by Filipinos living and working abroad rose by 5.3 percent in April, amounting to $1.7 billion versus $1.6 billion worth of money transferred to the Philippines in the same month last year.
"Remittance flows were sustained by the steady demand for Filipino workers abroad," the Philippines' central bank asserted in its report.
While the numbers released by BSP clearly indicate that many Filipino workers are already in the workforce, data gathered from the Philippine Overseas Employment Administration suggests many more workers are still waiting in the wings. BSP reported based on the POEA's figures that more than 85,000 hired workers were awaiting deployment, a stark rise of just under 17 percent from 72,941 last year over the same January-to-February period. Of these positions Filipino workers were hired for, most were in the service, professional, technical and production fields.
Not only are more Filipinos being hired, but there are also more financial services firms being opened that deal with remittances and money transfers, BSP reported. This provides a partial explanation for the increased inflows of overseas remittances.
"To date, there are about 4,732 bank branches, correspondent banks, remittance centers, tie-ups/agents providing remittance services compared to 4,575 entities in the same period last year," the BSP indicated in its report.
The central bank also detailed the types of remittances that have been sent through the first four months of the year. About $6.5 billion was in the form of cash while $5 billion was in bulk. Bulk chiefly came from overseas Filipino workers whose jobs were on land while $1.5 billion was from sea-based workers.
Not surprisingly, the countries fromwhich remittances chiefly came from largely mirrored where OFWs worked in. This included the United States, Canada, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Singapore, Italy, Germany and Hong Kong. In a separate report conducted by the National Statistics Office, most of these countries were dominated by OFWs in 2011 as well.
As noted by Business World Online, the BSP included additional data in April's remittance report, which involved non-cash items that were transferred or brought overseas by Filipinos to their families. These personal items – most of which were material goods – were valued at $1.8 billion, up from $1.7 billion in Aprill 2011.
While much of the world has been adversely affected by the global recession that’s been ongoing for the past several years, it hasn’t led to a decline in remittance volume, nor increased the flow of foreign workers leaving the U.S. for their home countries.
According to a new book, “Migration and Remittances during the Global Financial Crisis and Beyond,” which was recently released by the World Bank, migrant workers have largely been able to weather the storm brought on by the global financial crisis, which economists trace back to the end of 2008 and beginning of 2009. The book also indicates that even though the fallout from the recession has been significant, it likely could have been a lot worse, as foreign workers tend to be more willing to work for lower wages.
Despite immigrants’ ability to soften the blow caused to the economic meltdown, families have still felt the pinch, as many have been forced to cut back on their expenses, the report noted. Remittances and foreign workers who transfer money abroad, however, has enabled families to rely on an additional source of income.
“During the crisis, remittances continued to provide a steady source of foreign currency to developing country economies at a time when foreign aid remained flat and foreign direct investment declined sharply,” said Otaviano Canuto, the World Bank’s vice president of poverty reduction and economic management.
The book also indicates that while employment prospects in the world and the U.S. still have room to improve, remittances are nevertheless expected to increase in 2012. Projections indicate that foreign workers will send close to $400 billion home to their families, which is well above the $372 billion sent last year.
Hans Timmer, director of development prospects at the World Bank, reiterated that remittances have largely been able to withstand the economic collapse.
“The resilience of remittances is good news for developing countries as they remain one of the less volatile sources of foreign exchange earnings, particularly for the less developed countries,” said Timmer. “At the household level, these cash transfers are, in many cases, the only lifeline for families in the home countries.”
During previous recessions, many foreign workers have returned to their home country as a result of layoffs or other financial difficulties. That hasn’t been the case this time around, though, as noted by one of the co-authors of the book, Ibrahim Sireki, professor of transnational studies and marketing at Regent’s College in London. He said that in contrast to what many people were expecting, foreign workers have largely remained where they are, despite employment conditions worsening in many countries like the U.S. For those who did leave, however, some countries offered financial incentives for them to return.
With many economic indicators moving in a positive direction, the hope is that remittance volume will grow, but it’s encouraging to know that people have continued to send money to their families even though times have been tough.
There's some good news to report for people who routinely send money to India, as officials in the country are allowing more remittances in to help spur its economy.
According to Dow Jones, India's central bank – the Reserve Bank of India – recently more than doubled the number of remittances non-resident Indians can make to family in India in a given year, as the maximum number of permitted money transfers increased from 12 to 30.
Economists say that one of the reasons why the RBI decided to do this was to support the rupee, which has lost a considerable amount of value in recent months, down 10 percent when compared to the U.S. dollar, Dow Jones reports. In addition, since June 2011, the value of the rupee has diminished 20 percent.
The higher limit on number of transactions makes it easier to send money home to support your families in India
With Indian officials permitting more remittances to be sent to the country, you may want to consider sending your next money transfer with Xoom. While there may be a lot of money transfer services available, people choose Xoom to send money to India because of how simple the process is, not to mention affordable and fast.
Xoom offers bank deposits within 24 hours for almost all bank accounts in India, including Axis Bank, Citibank, HDFC, ICICI, Punjab National Bank, SBI, State Bank of India, and several others. Plus you can get great locked-in exchange rates and "fee-free money transfers" when you send more than $1,000.
Xoom is confident you'll like what you find when you send your money with today's best online money transfer service. You'll be even more impressed with how fast delivery is.
Several years ago, 2.2 million people took it upon themselves to send money to Poland. So much so, that 2.5 percent of Poland’s gross domestic product was due to remittances. However, since 2007, Polish remittance flows have declined sharply.
According to the Warsaw Business Journal, money transfers to Poland have deteriorated. While the report didn’t indicate how much remittances have trailed off, researchers from the think tank Adam Smith Center said the decline is largely attributable to the financial crisis that’s affected much of Western Europe, an economic issue that’s been felt throughout most of the world.
Perhaps as a result of lagging remittances and the Europe’s debt crisis, Poland’s overall economy has slowed down as well. The Polish business periodical reports that the country’s economy grew 3.5 percent through the first three months of 2012 compared to the same quarter in 2011, according to Poland’s Central Statistical Office. While this type of growth may be significant for some economies, it’s quite the downturn for Poland’s, which had been growing by 4.3 percent as recently as the fourth quarter of 2011. In the first quarter of 2011, the economy expanded by 4.4 percent.
“Data confirmed a strengthening of the negative impact of the economic downturn in the euro zone on Poland, both direct and indirect,” researchers wrote in the report, according to the Journal. “In coming quarters we expect further deceleration of economic growth in Poland.”
Government statistics indicate that a primary part of Poland’s economy is agriculture, as roughly 5 percent of the country’s gross domestic product is attributable to staple crops like potatoes, beets, rye, wheat and dairy products. However, as recently as 2007 a significant percentage also stemmed from foreign remittances sent from overseas destinations like the U.S. Polish natives send money to their families so they can take care of everyday tasks. As a result, by buying goods and services, this may improve Poland’s economy.
Fortunately, Poland is one of the 30 countries that Xoom transfers money to. By signing up for an account at Xoom.com, users can send up to $3,000 for the low price of $4.99. The money sent can then be deposited into the recipient’s account, as Xoom is affiliated with several banking institutions in Poland, including Bank Pekao, PKO Bank Polski and Bank Zachodini. Plus, with the current exchange rate of more than three zloty’s for every dollar, recipients will get a lot of bang for their buck.
Sign up for a Xoom.com account today and help put Poland’s economic state back on the right path.
Remittance flows and overall economic activity has been so strong in Mexico as of late that money experts are raising their expectations about how vibrant the country's economy will be this year.
According to a new survey performed by the Bank of Mexico of 29 economists, gross domestic product is expected to grow 3.72 percent this year. That's up from 3.62 percent the last time the poll was conducted.
Also moving at a robust pace were remittances. The Bank of Mexico indicated that in April, an increased flow of money transfers resulted in $2.03 billion. For the year, that puts the value of remittances Mexico has received at $7.4 billion, more than 6 percent ahead of the same four-month period in 2011.
As has been noted by a variety of financial experts, remittances are one of the biggest sources of money for Mexico, particularly from those living in the United States. In fact, the money generated from remittances has been ahead of what tourism has brought in for the country.
While remittances can help establish a country's economic footing, not to mention the financial readiness of a family, a new study suggests that people who receive money from them often have savings accounts, which is a sign that they're financially responsible.
Christian Ambrosius, who conducted the research that was published by Free University Berlin School of Business and Economics, argues that "receiving remittances is strongly correlated with the ownership of savings accounts, and, to some degree, with the availability of borrowing options."
In other words, people who receive money from their loved ones aren't spending what they earn in a wasteful manner. Instead, they're thinking about what they can do with it and then setting it aside in savings accounts so that their earnings can grow.
The researchers also argue that not only do individuals benefit from remittances – as it increases their financial responsibility – but institutions are strengthened as well.
"These effects are more important for rural households than for urban households and are more important for microfinance institutions, than for traditional banks," the study indicated.
This is just the latest handful of ways remittances are beneficial to society.
Though some parts of Africa are performing fairly well economically, most are in worse shape. However, a new study indicates that through remittance flows and sound governmental policies, the continent's economic growth could jump significantly.
The African Development Bank, the Organization for Economic Cooperation and Development, the United Nations Development Programme and the UN Economic Commission for Africa recently released a joint report forecasting Africa's financial vitality.If things continue at their current pace, Africa's economy could expand by 4.5 percent in 2012 and another 4.8 percent in 2013.
"The economic outlook for Africa remains optimistic," the report stated. "Natural resource-rich economies are expected to do better than more mature emerging economies."
Some of the most common natural resources exported in Africa include oil, gold, precious metals, diamonds, cocoa and timber.
The 291-page report also attributed much of Africa's growth to remittances, as many people who emigrate from Africa send money home to their families thanks to the jobs they have in countries like the United States. This enables them to pay for goods and services that they need on a day-to-day basis
Despite the overall positive assessment and projection, Donald Kaberuka, president of the AfDB, said the global economy is still on shaky ground, meaning that experiencing economic growth is far from a guarantee.
"I appeal for caution and not to show excessive optimism with regard to the continent's economic growth, because there are other issues that need to be considered carefully," said Kaberuka.
In addition to the ongoing debt crisis affecting much of Europe, political upheaval has impacted Africa, citing Mali as a specific example. This could also detract Africa from gaining ground.
The AfDB report indicated that because Africa's economic potential largely relies on the wealth natives and citizens obtain through their work, the continent must put a greater investment in tomorrow's workers.
"The youth is the most important wealth of Africa," said Kaberuka.
He added that with the number of youth in Africa projected to double in 30 years from now, governmental leaders of countries should put a greater emphasis on helping young people acquire new skills so that they can find the jobs they need to support themselves and their families.