Migrant remittances and private capital flows - Which is what?

The Uganda Daily Monitor reported recently that according to the World Bank’s latest Global Economic Prospects report, “remittances to developing countries is forecasted [sic] to recover modestly from $454 billion in 2009 to $771 billion by 2012, which still stands below the 2007 $1.2 trillion.” Since we produce the global remittances data and estimates (which incidentally show that remittance flows to developing countries

Photo © Curt Carnemark /  World Bank

reached $316 billion in 2009 and are forecast to grow by 6.2 percent to $335 billion in 2010 (see Migration and Development brief 12), the numbers in the Uganda Monitor made little or no sense to us. Until our colleague Andrew Burns, the lead author of the GEP 2010, pointed out that the Uganda Monitor has likely mistaken overall private capital flows to developing countries as remittances.

The issue of migrant remittances being confused with private capital flows (and even aid flows) is not new. Central banks all around the world have been struggling with this issue for several years now. A global survey of central banks that we conducted during 2008-09 suggests that central banks find it challenging to separate migrant remittances from other small-value transfers such as trade payments, small investments, and even transfers by/to non-governmental organizations and embassies.