09 Dec 2022
Did you know that remittances account for an average of 4%-10% of the developing nations’ annual GDP? In fact, Tonga’s GDP has the highest accounts of GDP, which goes up to 38.98%. However, the number of money transfers made to developing countries is subject to change due to numerous factors, such as political, economic, and social conditions.
This article enlists the predictions of remittance inflows in 2023 for developing countries and how money transfer operators will play their part in increasing the cash flow.
The new World Bank report predicts that the remittance outlook for South Asia in 2023 is highly uncertain. According to the report, the strong growth in remittances in the region in the previous two years might not sustain in 2023.
It is estimated that the remittances in Pakistan will grow by 8% in 2023. This is lower than the previous trends. The remittance flow to Pakistan increased by 20% in 2021 to $31 billion. This growth was powered by government incentives, support from migrants to their families back home, and inflows for the Afghan refugees in Pakistan.
The remittance inflow to Bangladesh is expected to rise by 2% only. This is almost equivalent to the 2021 trend when the remittance inflow grew by 2.2% to $22 Billion. There was a 24% spike high of remittances to Bangladesh in march 2022 to mark the start of Ramada. Since then, monthly remittance has seen a rapid decrease over the past eight months. Only a 2% gain in remittances is anticipated for the last quarter of 2022 and the early months of 2023.
According to World Bank’s Migration and Development Brief Report, India’s remittance inflow is expected to grow by 5% in 2023. India has had the highest remittances received in the past few years. There are over 32 million overseas Indians who send money online or using conventional methods, which accounts for this number. Meanwhile, Afghanistan’s remittance inflow will remain flat in the coming year.
South Asia is the largest region in terms of remittance inflows. In 2021, the remittance inflow grew 6.9% to $157 Billion in 2021. Numerous migrants returned to their home countries as the pandemic broke out in early 2020, lowering the remittance growth rate. However, this issue got tackled with the availability of vaccines and the opening of Gulf Cooperation Council economies that enabled a steady return of the migrants to their host countries in 2021. Another major reason for this remittance growth was the better economic situation in the USA.
Expatriates worldwide typically trusted the conventional methods, which they had been using for years. However, digitisation brought more secure, convenient, economical, and fast transfer ways for cross-border transactions. So, people started using digital remittance providers to send money online to their loved ones back home, which primarily contributed to increased remittance inflows to low-to-middle-economies.
Remittances are the dominant source of foreign exchange in South Asia. This region has the lowest average remittance cost of any world region at 4.3%, although it is still higher than the SDG target of 3%.
The remittance inflows in 2022 are likely to decline by 4.4%. In the fourth and last quarter of 2021, the costs of remitting $300 to any country in South Asia were, on average, 4.3%.
The outlook of South Asian remittances in 2022 suggests a winding down in growth driven as much by global and domestic geopolitical and economic forces. Presently, this region is shielded from the direct impacts of the ongoing Ukraine-Russia war. However, the forecast suggests remittances will be lowered in the coming year.
As most population prefers digital tools to send money abroad, digital remittances will continue to grow steadily throughout 2023.
It is predicted that the shift towards digital services will accentuate as the growing number of tech-savvy customers opt for affordability and convenience.
Predictions suggest that money transfer companies like ACE will continue prioritising safety measures above all else. On the sender’s end, more companies will integrate additional features that provide validity in identifying their customers, from phones’ IP addresses to other identity documents.
On the receiving end, ACE supports developing nations by providing a robust network of cash pickup points for greater convenience and accessibility. All connections through the website and app of ACE Money Transfer are secure and encrypted. It also incorporates an automated machine learning system for fraud detection.
Remittance transfer providers will focus on making things simpler for the users, with a strong tendency to decrease the number of steps to initiate the transfer. This trend towards effectiveness and efficiency will ensure that the process becomes as easy as sending a text.
ACE Money Transfer erases the need to go to a fixed payment point and saves time and money. Hence, more and more people will aim for digital money transfer service like ACE for sending remittances in times of recession in 2023.
Many expats are used to waiting hours or even days for a wire transfer to arrive at its destination. Expectations from online money transfer apps are the opposite. With the new advancements across the digital landscape, users expect their money to be delivered within minutes.
Companies will continue to invest in enhancing their technologies to deliver the best and quickest customer experience. ACE Money Transfer guarantees a seamless data exchange, and remittance flow is uninterrupted. The technology of ACE allows 95% of transactions to be completed within minutes. In addition, increased communication and effective tracking features will be integrated globally to provide our users with peace of mind.
With the extreme volatility in the market, expats will face a lot of trouble sending remittances. ACE Money Transfer continues to provide affordability in the recession
It is always looking for ways to cater to its users. While the exchange rates cannot be controlled, ACE aims to provide the lowest transfer fee yet at the highest exchange rates for every global money transfer.