US President-elect Donald J. Trump's plan to mass deport America's illegal migrants won't dent remittance flows to countries reliant on these cash transfers, according to a World Bank official.
This, as the Washington-based multilateral lender expects the Philippines to remain as the world's fourth-biggest recipient of remittances this year.
Dilip Ratha, lead economist and economic adviser to the vice president of operations at the World Bank's Multilateral Investment Guarantee Agency (MIGA), noted in a Dec. 18 blog that there are "worries about large scale involuntary return of existing migrants in the United States."
The Trump 2.0 administration plans to undertake mass deportation of undocumented migrants in the US, of which as many as 300,000 are Filipinos
For Ratha, "remittances are unlikely to decline in 2025—this is because remittances are sent by new migrants as well as existing migrants."
"New migration flows to the United States may decline in 2025, but people considering voluntary return are likely to reconsider their decision and stay on. The net impact on the stock of migrants would therefore be smaller than the combination of decrease in new migration and increase in forced return. And those returning home are likely to bring in their savings either with them or, likely, remit their savings home in anticipation of their return," Ratha explained.
The World Bank economist cited past experiences when large-scale return migration happened, such as at the height of the global financial crisis of 2019 as well as the Gulf War back in 1991, in which remittance flows later bounced back post-crises.
"Those migrants who stay on during episodes of large-scale return are likely to send more money home, in part, because they'd be working harder, trying to save and send more remittances. We saw that during the global financial crisis in 2009 and more recently, also during the COVID-19 crisis in 2020 to 2021," he added.
"During the pandemic crisis, migrants did not really return on a large scale. On the contrary, most of the host communities increased their reliance on migrant workers. The demand for migrant workers increased at both ends of the skill spectrum -- for doctors and nurses and IT workers at the high end and for lower skilled workers in hospitals and stores and delivery services," Ratha pointed out.
"And since the pandemic, there has been a rapid increase in the employment level of foreign-born workers in the United States, a sharper increase than in the employment level of native-born workers. It is likely that native born workers are less willing to return to work and more willing to work from the safer environment of home. Dirty and dangerous jobs, once again, are left to be done by migrant workers," according to Ratha.
A separate blog authored by Ratha as well as World Bank financial analyst Eung Ju Kim and senior economist Sonia Plaza showed that they expect the top five remittance inflows recipient-countries for 2024 to be India (with a projected $129.1-million worth), Mexico ($68.2 billion), China ($48 billion), the Philippines ($40.2 billion) and Pakistan ($33.2 billion).
The latest Bangko Sentral ng Pilipinas (BSP) data had shown that cash remittances coursed through the formal banking system inched up by three percent year-on-year to $28.3 billion as of end-October.
"Officially recorded remittances to low- and middle-income countries (LMICs) are expected to reach $685 billion in 2024. The true size of remittances, including flows through informal channels, is also believed to be even larger. The growth rate of remittances in 2024 is estimated to be 5.8 percent, significantly higher than 1.2 percent registered in 2023," the World Bank said.
"The recovery of the job markets in the high-income countries of the Organization for Economic Cooperation and Development (OECD), following the onset of the COVID-19 pandemic, has been the key driver of remittances. This is especially true for the United States where the employment of foreign-born workers has recovered steadily and is 11-percent higher than the pre-pandemic level seen in February 2020," the World Bank noted.
For the World Bank, "remittances will likely continue to increase because of enormous migration pressures driven by demographic trends, income gaps, and climate change."
As such, "countries need to take note of the size and resilience of remittances and find ways to leverage these flows for poverty reduction, financing health and education, financial inclusion of households, and improving access to capital markets for state and non-state enterprises," according to the World Bank.