Remittances
Remittances — the money migrants send home — are one of the largest, most stable forms of cross-border income for low- and middle-income countries. The numbers have their own quirks: definitions differ between balance-of-payments concepts, informal flows are hard to capture, and the cost of sending small amounts is the policy lever the SDGs took up directly.
Last reviewed on 2026-04-27.
What is — and is not — counted
Personal remittances
The headline series most reports cite is “personal remittances received,” defined in the IMF Balance of Payments Manual as personal transfers and compensation of employees received from abroad. Personal transfers are current cash and in-kind transfers between resident and non-resident households. Compensation of employees covers wages of cross-border workers (people working in one economy while resident in another). National central banks compile the totals from bank settlements, money-transfer-operator data, and household surveys.
Inflows versus outflows
Remittances are reported as inflows by the receiving country and outflows by the sending country. The two should match in principle but rarely do in practice — different reporting practices, different exchange-rate snapshots, and different treatment of in-kind transfers leave gaps. The World Bank publishes both sides and reconciles as far as possible; corridor-level estimates are usually the receiving-side figure.
Formal versus informal channels
Official remittance series capture flows through banks, regulated money-transfer operators, post offices, and increasingly mobile-money services. Informal channels — cash carried in person, hand-to-hand networks, and traditional value-transfer systems such as hawala — are not captured by national accounts but are estimated by the World Bank and academic studies to add a non-trivial share to the headline. The official figure is therefore a lower bound on actual transfers, especially in countries with weak banking penetration or capital controls.
Share of GDP, not absolute size
The economies for which remittances matter most are usually not the ones at the top of dollar-volume rankings. Large absolute receivers (such as India, Mexico, China, the Philippines) have remittances measured in tens of billions but as a low single-digit share of GDP. Smaller economies — many in Central Asia, the Caucasus, Central America, and the Pacific — receive remittances equivalent to 20% or 30% of GDP. The scale-by-GDP view is the one that tracks economic dependency on the inflow.
Corridors and the cost of sending
Corridors
A corridor is a directed pair: USA → Mexico, Saudi Arabia → India, Russia → Tajikistan, France → Morocco. Corridors concentrate by historical migration patterns and geography. A short list of high-volume corridors accounts for most global flows. Corridor-level estimates are reconstructed by combining migrant-stock data (UN DESA international migrant stock), wage levels in sending countries, and reported inflows in receiving countries; they are estimates, not directly measured.
Cost of sending
The cost of sending US$200 — the World Bank’s benchmark amount — is reported corridor by corridor in the Remittance Prices Worldwide (RPW) database, updated quarterly. Cost includes both the explicit fee and the foreign-exchange margin built into the rate the sender receives. Costs vary widely: from low single-digit percentages on busy, competitive corridors to double digits on small, regulated, or sub-Saharan corridors. SDG target 10.c calls for the global average to fall to 3% and for no corridor to exceed 5% by 2030; both targets remain off-track in most years.
Why costs differ
High costs reflect a combination of low corridor competition (few licensed providers), de-risking by correspondent banks (which has reduced bank-to-bank channels in some regions), compliance burdens (anti-money-laundering and counter-terrorist-financing rules), small average transaction sizes (fixed costs absorbed across small principals), and weak last-mile infrastructure in receiving countries. Mobile-money corridors — especially in East Africa — show that the lower-bound cost can fall dramatically when end-to-end digital channels are available.
Volatility versus stability
Remittances are often described as a counter-cyclical or stable source of finance for receiving countries — and on average they are: they tend to fall less in recessions than FDI or portfolio flows, because diaspora workers continue sending even when their host-economy wages soften. They are not, however, immune to shocks. Oil-price collapses affect Gulf-cooperation corridors; recessions in major host economies cut sender wages; pandemic-era restrictions briefly disrupted cash-based corridors before mobile-money substitution recovered them.
Common misreadings
Confusing the BoP item with all migrant transfers
Personal remittances cover transfers between households. Wages earned by short-term workers, gifts in kind, and informal cash carried home are partially excluded or under-captured. Treat the headline as a robust lower bound, not a complete picture.
Comparing remittances to aid as if they substitute
Reports often note that remittances exceed official development assistance to low- and middle-income countries. The two flows accrue to different recipients, are governed by different incentives, and finance different things. Saying one “dwarfs” the other tells you about volume, not about substitution.
Reading single-year drops as collapses
Annual revisions to the World Bank Migration and Development Brief can move totals by several percent in either direction. Multi-year averages are more reliable than single-year shifts, especially for smaller corridors.
Treating the global average cost as the corridor cost
The global average masks large corridor heterogeneity. A given migrant’s actual cost depends on their specific corridor and channel; the global headline rarely matches their experience.
Sources
The standard references on remittance flows are the World Bank’s KNOMAD (Global Knowledge Partnership on Migration and Development) Migration and Development Brief and bilateral remittance matrices, the IMF Balance of Payments Statistics for the underlying current-account series, and the World Bank’s Remittance Prices Worldwide database for corridor-level cost data. The UN DESA international migrant stock series provides the demographic backdrop that drives corridor sizes. Central banks of large receiver economies — Bangko Sentral ng Pilipinas, the Reserve Bank of India, Banxico — publish more granular monthly flows.
Remittances connect migration with the economy page’s broader macro picture, and influence outcomes covered in poverty. Read those pages alongside this one for the household and macro reads.