On the remittance performance
Couple of weeks ago, I looked at Bangladesh’s exports performance during the global recession. Remittance was another channel through which Bangladesh was likely to have been affected. Turns out remittances have also showed fair degree of resilience, though this is not unique to Bangladesh. Further, looking at the source of remittances reveal interesting patterns too. Particularly, does anyone know why remittances from Malaysia have nearly trebled in the past year?
Let’s start with how overall remittances have performed during the recession. Chart 1 compares Bangladesh with Pakistan and Philippines. Data are from the CEIC Asia, in US dollar, and smoothed by 3 month moving average. In Pakistan and Bangladesh, remittances fell by 8-9% in October, and then stayed down for the rest of 2008. In Philippines, remittances stayed relatively flat during the early months of the recession. Then, in the first half of 2009, Bangladesh and Pakistan raced ahead. In more recent months, to various degree, remittance flows to all three countries seem to have been cooling.
Big takeaway then: remittances have held up, though this is not unique to Bangladesh. The question: why remittances didn’t suffer as much as what was feared?
Chart 2 looks at remittances to Bangladesh from various regions. Middle East accounts for over three-fifths of our remittances, with Saudi Arabia alone accounting for over a quarter. Remittances from this region fell by 4% in October 2008, but then continued to grow at the pace we have seen in recent years. Anglophone countries account for another fifth of remittances. In September this year, remittances from the US were about 15 per cent lower than a year ago, while those from the UK hadn’t changed over the year. Remittance from Europe, particularly Italy, got hammered during the recession, nearly halving in the early months, before staging a recovery of sorts more recently.
But it’s the migrant workers to Asia who seem to have put in a remarkable performance. Particularly, remittances from Malaysia has nearly trebled in the past year. In 2007, we received $20m from Malaysia (by way of comparison, in that year we received $1788m from Saudi Arabia and $1089 from the US). In the first 9 months of this year, the numbers are $324m from Malaysia, $2296 from Saudi, and $1168 from the US.
What are our workers doing in Malaysia?