Global remittances to drop by 20% amid coronavirus, says World Bank

The drop is already dealing a heavy blow to families and entire economies in the developing world. From South Asia to Latin America, relatives of workers who send money from wealthier countries are already reporting difficulty meeting basic daily needs after cuts in remittances.

Remittances last year became a larger source of funds for poorer nations than foreign direct investment, Remittances reached a record 554 billion in 2019, a number that may have been ever larger due to the flow of remittances through informal channels like cash carried by hand. Foreign direct investment to developing countries is expected to drop 35 percent this year, the World Bank said.

In the largely indigenous Guatemalan town of Joyabaj, half of the 100,000 residents depend on remittances, almost all from the U.S.

Rosa L pez, 18, left a money-transfer office this month holding her 2-year-old son and 100 sent by her sister, who works at a dairy in Texas. The dairy has cut working hours in half, forcing the sister to cut back the money she sends.

The money that came last week will allow L pez and seven other relatives to buy rice, beans and other basics, but they may have to stop paying the light and water bills, she said.

We need to figure out a way not to die of hunger, L pez said. She's the only one who's helping the entire family.

The World Bank recommended that governments and businesses work to protect immigrants from the economic and health effects of the coronavirus, saying migrants laborers were often excluded from programs meant to cushion the effects of the pandemia. And it encouraged states and companies to lower the costs of sending money home, which can be as high as 20 percent in the most expensive region for remittances, Southern Africa.