The Impact of the COVID-19 Pandemic on Remittances: Preliminary Evidence at the Global Level

Recent years have witnessed a growing importance of remittances with remittance flows to low and middle income countries in particular surpassing both Official Development Assistance (ODA) and Foreign Direct Investment (FDI). The unprecedented COVID-19 pandemic had a major impact on various fronts including remittances, particularly in some countries and regions, thus resulting in potential negative economic and social effects. Against this background, the paper contributes to the growing recent literature on the impact of the pandemic in developing countries by trying to examine the influence of COVID-19 on remittances and provide insights into the potential developmental effects this could have in recipient countries. Our preliminary empirical analysis based on the limited data currently available suggests a non-existent or, at best, weak positive relationship between the decline in remittances and food insecurity. In addition, we found a moderate positive correlation between these remittance reductions and households' inability to pay for medical care. A moderate negative correlation was also found to exist between COVID-19-induced changes in remittances and educational activity.