Remittance growth plummets to 8.6 per cent
Remittance growth plummeted sharply over the months last fiscal, as spending capacity of the oil exporting countries declined along with rampant fall in oil prices since last year.
Slowdown in Gulf economies directly hit remittance inflow as oil-exporting countries have been providing jobs to Nepali migrant workers.
On the other hand, the number of Nepali workers going abroad for
foreign employment also dropped by 20.6 per cent in the first 11 months of fiscal 2015-16.
A total of 386,315 foreign job-seekers left the country for employment abroad as compared to 512,887 in the same period of the previous fiscal year.
According to the recent Macroeconomic Report of Nepal Rastra Bank (NRB), workers’ remittances grew 8.6 per cent to Rs 598.95 billion in the first 11 months of fiscal 2015-16 compared to a growth of 12.4 per cent in the corresponding period of the previous fiscal 2014-15.
Remittance growth slowed down after peaking at 27.5 per cent in the second month of fiscal 2015-16. Growth of remittances slowed down as government spending was cut in the Gulf nations — the major labour destinations of the country — thereby affecting job creation.
The country had bucked the trend of slowdown in remittance globally as the migrant workers from earthquake-hit areas sent more remittances to their families in response to the quake in fiscal 2014-2015 and also in the beginning of fiscal 2015-16.
Remittance growth was 23 per cent in October and constant growth of 19.4 per cent was witnessed in November and December. Remittance growth slowed down to 17.3 per cent in January and 16.9 per cent in February, 15.2 per cent in March and 13 per cent in April, according to NRB.
In May, remittance growth further slowed to 10.2 per cent and stood at 8.6 per cent in June.
Outflow of foreign job-seekers also dropped, as many youths got involved in reconstruction of their damaged homes in the quake-hit districts.
Similarly, rift between the government and manpower agencies and Malaysian government’s move to stop hiring foreign labour (which was opened a few months back) caused slowdown in the outflow of workers.
The slowdown in inward remittance has raised anxiety among policymakers. The country had faced a similar situation back in fiscals 2009-10 and 2010-11 following the global financial crisis.
As remittance has become a major source of foreign exchange earnings since long, slowdown in remittance had put pressure in balance of payments (BoP) in fiscal 2009-10.
As per the NRB’s macroeconomic update of the first 11 months of fiscal 2015-16, BoP recorded a significant surplus of Rs 171.15 billion in the
review period compared to a surplus of Rs 127.2 billion in the same period of fiscal 2014-15.
While the country is still in a comfortable position, the continuous slowdown in inflow of remittance may pose various risks to the economy in the future, according to experts.