Remittances represent the money sent by migrant workers back to their home countries. A ‘remittance corridor’ is essentially the sum of remittances sent between two specific countries. Hundreds of billions of dollars are sent in remittances globally each year. A disproportionately large amount of this vast flow is captured in just a handful of bilateral channels. Here is a look at the top remittance corridors of the world.
The single largest bilateral transfer of remittances in the world currently flows from the US to Mexico. From $24 billion in 2015 this massive corridor grew by 42.7% to cross $34.70 billion in 2017. Mexico remains the largest recipient of remittances from the US. More than 7.5 million Mexican migrants in the US send remittances to their families. The average cost of sending remittances from the US to Mexico is 4.22%, or $8.44 for every $200 sent. This is a bit lower than the world average. Mexicans love to send money online via mobile money applications. In 2018 remittances to Mexico contributed 2.8% to the country’s GDP. Government policies in both countries, geographic proximity, shared culture, and a long shared border are some favorable factors for US-Mexico remittances to continue to grow.
The Indian Diaspora in the UAE is truly vast. At 3.3 million strong, Indians are the largest migrant group in the UAE. This makes India the largest recipient of remittances from the UAE. Indian migrants in the UAE send $18.53 billion to India annually in remittances. This corridor saw a staggering 34% growth from 2017 to 2018. The average cost of sending remittances to India from the UAE is 3.45%, or $6.9 for every $200 sent. This is cheaper than most other remittance corridors. Indian migrants in the UAE also prefer mobile applications as their favorite method of sending remittances. The fast processing speed and greater ease of mobile apps has made them very popular for migrant workers as well as their families back home. According to the World Bank remittances from UAE contributed 0.68% to India’s GDP in 2018.
This is the third largest remittance corridor in the world as per the World Bank’s 2018 data. Remittances sent from Hong Kong to China in 2018 amounted to $16.34 billion. The corridor grew by 5.09% from 2017 to 2018. There are 2.4 million Chinese migrants in Hong Kong. They pay an average of 5% in transfer fees every time they send remittances back home. Remittances from Hong Kong represent a small fraction of China’s GDP, merely 0.12%. However these remittances are vital lifelines for many Chinese families. Banks are the preferred remittance medium in this corridor.
Being the largest origin country of remittances by a wide margin, the US is the starting point of many global remittance corridors. After Mexico, China is the second largest recipient of remittances from the US. In 2017, $16.14 billion were sent to China from the US. In 2018 the corridor shrank by 10%, to $14.52 billion. 1.7 million Chinese remittance senders reside in the US. The average cost of sending remittances from the US to China is 5.39%, or $10.78 for every $200 sent. Remittances from the US contributed 0.11% to China’s 2018 GDP. Unlike their Hong Kong compatriots Chinese migrants in the US favor mobile applications over banks as their remittance method.
Remittance sent from the US to India grew from $11.7 billion in 2017 to $12.7 billion in 2018. There are over 2.4 million Indians living in the US. 80% of them send remittances to India. The average cost of sending remittances from the US to India is just 3.27%. The dominant players in this remittance corridor are still banks. Nonetheless, mobile applications are fast becoming the preferred medium because of their ease and speed. Better employment opportunities and education are the major factors driving the migration of Indians to the US.
In 2018 the US-Philippines remittance corridor was ranked seventh largest in the world. 1.94 million remittance senders transferred more than $11.4 billion to the Philippines from the US in 2018. The average cost of sending remittances in this corridor is 3.51%, or about $7.01 for every $200 sent. As elsewhere in the world, OFWs in the US also prefer to send money online. Remittances from the US contributed 3.3% to the Philippines’ GDP in 2018.
About the author:
Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive, and watch documentaries.