Bangladesh is poised to become the seventh-largest remittance-receiving country in 2023, with remittance flows expected to remain robust in 2023, defying earlier projections of negative growth, according to the latest Migration Development Brief of World Bank released on December 18, 2023.
The report said that Bangladesh is projected to receive remittances amounting to $23 billion in 2023, showcasing a growth rate of 7 percent. This positive outlook comes after a period of negative growth in formal remittance flows triggered by balance of payment crises in 2022.
In 2022, Bangladesh saw a downturn in remittances, with inflows dropping by 5 percent to $21.5 billion. This decline was attributed to challenges related to exchange controls and parallel market exchange rate premia, which impacted confidence in formal channels.
However, the year 2023 marks a significant rebound, with remittance flows expected to not only recover but surpass the 2021 levels of $22 billion.
The report, however, underscores that improvements in domestic economic conditions, following the implementation of International Monetary Fund (IMF)-supported policy programs, have contributed to a gradual restoration of macroeconomic stability. This, in turn, has bolstered migrants’ confidence in the official banking system, leading to an increase in remittances through formal channels.
While Bangladesh remains resilient in the face of global economic uncertainties, the report notes that the growth outlook in the Gulf Cooperation Council (GCC) countries, significant contributors to South Asian remittances, is positive. However, new job creation for South Asian migrants in 2024 is expected to be constrained by low oil prices, which might impact remittance flows in the coming years.
Despite these challenges, Bangladesh’s remittance sector is set to play a crucial role in supporting the country’s economy. The report underscores the importance of continued efforts to strengthen economic stability and boost confidence in the formal banking system to ensure sustained growth in remittance earnings.
As remittances play a pivotal role in Bangladesh’s economic landscape, policymakers and stakeholders are encouraged to focus on maintaining the positive momentum, leveraging initiatives that enhance formal channels, and addressing challenges related to exchange controls and informal channel such as hundi.