Defying the Odds: Remittances During the COVID-19 Pandemic

The COVID-19 pandemic has caused a large loss of human lives and led to the sharpest and most coordinated global output contraction in recent history. Countries were forced to put restrictions on people’s mobility to fight the pandemic and shut down non-essential businesses for extended periods. Unlike during the Global Financial Crisis where the advanced countries were hit hard, while many low-income developing countries were relatively unscathed, the COVID-19 pandemic has had a large adverse impact on economic activity in both advanced and developing countries. While the advanced economies were able to provide significant fiscal and monetary support to their population, developing countries, particularly low-income countries (LIC), could only afford much less due to limited policy space.

This paper by the IMF provides an early assessment of the dynamics and drivers of remittances during the COVID-19 pandemic, using a newly compiled monthly remittance dataset for a sample of 52 countries, of which 16 countries with bilateral remittance data. The paper documents a strong resilience in remittance flows, notwithstanding an unprecedented global recession triggered by the pandemic.