LIVE MARKETS-Why emerging markets could see a sharp drop in remittances
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WHY EMERGING MARKETS COULD SEE A SHARP DROP IN REMITTANCES
Remittances, money sent home by migrant workers, are expected to decline across emerging market (EM) economies in 2026, with the steepest falls projected in Asia, Goldman Sachs said in a research note on Tuesday.
The Wall Street brokerage expects EM remittance receipts to fall by 1.0% year-on-year in 2026, as the impact of the Iran war disrupts economic activity across major sender countries in the Gulf Cooperation Council (GCC) region.
The drop in remittances comes as official development assistance (ODA), government aid to developing countries, fell by 23.1% in 2025, with further declines projected, and foreign direct investment (FDI) remains volatile amid geopolitical uncertainty.
Remittances, currently the largest source of external capital for EMs excluding China, reached $622 billion in 2024, surpassing FDI at $402 billion.
"Remittance-sender countries' GDP is the primary determinant of remittance flows (both structurally and cyclically)," wrote analysts at Goldman Sachs.
The brokerage said EM Asia (ex-China) is most exposed, with declines of 2.6% expected, led by India, Pakistan, and Indonesia. In contrast, Latin America is forecast to see average growth of 1.2% year-on-year, with most remittances sourced from the United States.
Goldman Sachs said understanding remittance dynamics is "essential to gauge EM external financing resilience."
(Akriti Shah)
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