MANILA/MEXICO CITY -- Remittances to emerging nations are projected to fall 25% this year as laborers abroad lose work to the pandemic, slamming their economies.
"I have to survive on rations of rice and canned food," a 54-year-old Manila resident said. His eldest son, working in construction in Saudi Arabia, used to send him about 10,000 pesos ($200) a month to cover food expenses. But the remittances have almost completely stopped.
The impact of the new coronavirus reaches beyond countries were cases are growing, amid city lockdowns and other steps to control its spread. Many of the laborers from emerging nations work in food service, retailing and tourism in the U.S., Europe and the Middle East, where those industries have been restricted because of COVID-19.
Remittances to emerging nations, excluding China, will plunge 24.9% to $223 billion in 2020, according to a June forecast from the U.S.-based Institute of International Finance. After growing 4.6% to a record $297 billion in 2019, the figure is projected to fall much more sharply than the 5.9% drop of 2009 on the heels of the global financial crisis.
In such countries as El Salvador and Honduras, remittances account for roughly 20% of gross domestic product. The share exceeds 10% in Lebanon and Egypt. These money transfers not only support laborers' families back home, but also prop up the originating countries' economies.
The Philippines has also traditionally been a source of migrant labor, owing to a lack of work offering decent pay back home. Some 10 million Filipinos, or a tenth of the population, work in the U.S. or elsewhere. But the coronavirus has radically altered the landscape. Labor and Employment Secretary Silvestre Bello said in June that 400,000 migrant workers have lost their jobs.
Remittances to the Philippines fell 16.2% on the year to $2.05 billion in April, with nearly 80,000 people having returned home after losing jobs abroad. The central bank sees remittances declining 5% from the $30.1 billion of 2019, pushing down GDP growth by 0.4 percentage point.