COVID-19 Impact on Global Money Remittance Market: Short and Long-Term Implications

The COVID-19 pandemic has had a major impact on the global money remittance market, both in the short and long term. In the short term, disruptions in the global economy and labor market caused by the pandemic have resulted in a decrease in the amount of money being sent through remittance channels. This has had a particularly negative impact on migrant workers and their families, who rely on remittance income and have been affected by job losses and economic downturns caused by the pandemic.

Impacted Migrant Workers

COVID-19-related restrictions have affected a large number of the estimated 164 million migratory workers, both in terms of immediate job loss and their ability to engage in economic activity overseas, even once the restrictions are lifted. Strict lockdowns have disproportionately impacted industries that rely heavily on migrant labor, such as transportation and agriculture. In the transportation industry, over 52,000 extreme mobility limitations have been imposed worldwide, while in the agriculture sector, producers have experienced acute labor shortages due to mobility restrictions, resulting in interruptions in harvesting, processing, and distribution and affecting the agro-food system as a whole.

Regional Remittance Flow

The impact of COVID-19 on remittance flows has varied by region. Remittance flows to East Asia and the Pacific declined by around 7.9%, while flows to Europe and Central Asia fell by 9.7%. In contrast, remittance flows to Latin America and the Caribbean increased by 6.5%, and flows to the Middle East and North Africa region increased by 2.3%. The cost of sending money through remittance channels also varied by region, with the average cost of sending USD 200 declining slightly in some regions and increasing slightly in others.

Long Terms Impact

In the long term, the impact of COVID-19 on the global money remittance market will depend on the duration and severity of the pandemic and its economic effects. If the pandemic continues to have a negative impact on the global economy and labor market, it is likely that the flow of money through remittance channels will continue to be impacted. However, it is also possible that the pandemic could lead to changes in the way that money is transferred internationally, which could potentially have an impact on the global money remittance market. For example, the increased use of digital payments and online platforms for remittances could become more prevalent as people look for ways to send money safely and efficiently during the pandemic.

The COVID-19 lockdown has highlighted the need for digitalization in the delivery of money transfer services, as it has hampered the business of money transfer operators (MTOs) that rely on migration. However, a more significant factor disrupting remittance flows has been the disproportionate loss of income experienced by migrants who have become stuck in countries of destination or returned to find little prospect of economic activity in their areas of origin, which have also been affected by economic stagnation.

In conclusion, the COVID-19 pandemic has had a significant impact on the global money remittance market and is likely to continue to have an impact in the coming years. It is important for governments, financial institutions, and individuals to be prepared for potential changes and to continue to monitor developments in the market. To help navigate these challenges, Makreo Research's "Money Remittance Market Analysis and Forecast to 2027" report can provide valuable insights and guidance on the current and future state of the money remittance market.

 

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