Remittances are predicted to fall by 13 percent in the East Asia and Pacific region this year affecting countries such as Tonga, due to the economic crisis caused by CoViD-19, according to the World Bank.

Globally, remittances are predicted to fall by around 20 percent, the sharpest decline in recent history.

The World Bank [2] said the slowdown in the East Asia and Pacific region is likely to be driven by declining inflows from the United States which is the largest source of remittance to this area.

CoViD-19 has caused countries to shutdown impacting businesses who have had to let go of employees or reduce wages affecting migrant workers who send money to their home countries.

Remittance-dependent

Tonga, and other Pacific Island countries who are remittance-dependent could see households at risk as remittances decline over this period.

World Bank Group President David Malpass said remittances are a vital source of income for developing countries.

“The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.”

“Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”

According to the World Bank data, migrant remittances to Tonga in 2019 made up 37.6 percent as a share of GDP.

The first quarter of 2020 saw the average cost of sending $200 to the East Asia and Pacific region drop to 7.13 percent, when compared to the same quarter in 2019.

However, in 2021 the World Bank anticipates a recovery of 7.5 percent.