Economic Contagion and the Repercussion on Remittances: Evidence from Low and Middle-Income Economies

Abstract

The outbreak of the coronavirus disease in 2019 (COVID-19) wreaked havoc on the social, psychological, economic, and political buoyancy of all economic activities worldwide. The economic challenges caused by the interruption in worldwide economic activities significantly impacted remittances flow to low- and middle-income economies (LMIEs). This study used the past, present, and predicted remittances data of migration dynamics within countries to analyse the economic impact on remittances. Remittances to most LMIEs plunged during the pandemic intense period; however, the decline was temporary as the flows increased due to countrywide policies and individuals’ emergent needs. The trend of economic contagion is fundamentally unique in that even the primary source of remittance sending nations have been greatly impacted. The global nature of this pandemic raises numerous questions, including whether the decline in remittances will continue for a short term or will last for an extended period to stagnate LMIEs. This current study’s results reveal that while remittances flow to key recipient nations declined between 2019 and 2020, there has not been a sharp decrease and most of the nations were on the path of recovery in 2021. This study proposes that policymakers support remittances flow on a higher growth trend in successive years based on Sustainable Development Goals to attain global inclusive development. This research further recommends the adoption of higher technology transfer of remittances of migrant workers within the emerging and low- and middle-income economies.