Remittances are forecasted to sharply decline in 2020 due to the influence of Covid-19 pandemic. In 2019, the remittances to HCM City reached 5.3 billion US dollars, but the prospect this year is not bright.
In addition to the report of the State Bank of Vietnam (SBV) HCM City branch, the report of the World Bank (WB) dated April 22nd 2020 predicted that the global remittances will fall by about 20 percent due to the Covid-19 pandemic, in which the East Asia and Pacific will experience a reduction of 13%, mainly due to the drop in cash flows from the US the region’s largest source of remittances.
In fact, some remittance companies in the market said that the amount of remittances transferred in the first three months of 2020 fell significantly due to the pandemic. According to Dong A Remittance Company, the turnover of overseas remittances in the first 22 days of April decreased by half compared to the same period of March. In particular, the biggest reduction was recorded from the Europe, followed by the US and Canada and the labour export markets. A reduction of 30 percent in remittance turnover was also recorded from the Australian market.
The pandemic has caused many workers to lose their jobs and temporarily stay home; business activities to stall, leading to the decrease in remittances transferred to their relatives.
Remittance companies forecasted that the remittances will continue to fall in the second quarter of 2020 and hardly reach the realised figure in last year of the disease continues.
However, the WB said that remittances will recover in 2021. WB estimated that in 2021, remittances inflows to low and middle-income countries will increase by 5.6 percent to 470 billion US dollars. However, this outlook is still uncertain and depends on the impact of the Covid-19 pandemic on the global growth prospect and the measures to curb the spread of disease.
