Board of Governors of the Federal Reserve System

Figure 1. World Remittances

The figure is titled "World Remittances" and illustrates trends in global remittances from 1980 to 2024 through two overlaid line graphs sharing a common time axis. The horizontal axis (X-axis) spans evenly from 1980 to 2024, while the vertical axes represent different metrics: the left Y-axis measures remittances in billions of dollars, ranging from 0 to 800 billion in 200-billion increments, and the right Y-axis shows remittances as a percentage of global GDP, ranging from 0% to 0.8% in increments of 0.2%. The red dashed line, labeled "Remittances," tracks the total value of remittances, starting near zero in 1980, rising slowly until the mid-1990s, and then increasing sharply to exceed 800 billion by 2024, with slight dips during global economic crises such as 2008 and possibly 2020. The blue solid line, labeled "Remittances (% of global GDP)," depicts remittances as a share of global GDP, remaining flat at around 0.2% from 1980 to 2000 before rising steeply after the early 2000s to reach approximately 0.8% by 2024. Overall, the figure demonstrates significant growth in remittances both in absolute terms and relative to global GDP, while highlighting fluctuations associated with major economic events.

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Figure 2. Remittances Growth for selected economies

The figure illustrates the growth rates of remittances for several countries over time, expressed as a 4-quarter percent change and plotted from 2014 Q1 to 2024 Q1. The X-axis represents time in quarterly intervals, while the Y-axis displays the 4-quarter percent change in remittances, ranging from -40% to +60%, with a horizontal black line marking the 0% midpoint (no growth). Each country is represented by a distinct line color and pattern: Colombia (green dotted line), India (blue dot-dashed line), Mexico (purple dashed line), Philippines (orange long-dashed line), Guatemala (red solid line), Indonesia (dark pink two-dashed line), and Nigeria (brown dashed line). The data reveals significant variation in growth rates between countries, with notable spikes and drops corresponding to global and regional economic events. Negative growth is prominent across nearly all countries from 2020 Q1 to Q2, coinciding with pandemic-related disruptions. After 2020, growth rates recover to positive levels, with most countries stabilizing around 10% or slightly below from 2022 Q1 to 2024 Q1. This figure highlights the fluctuating yet stabilizing patterns of remittance growth in the post-pandemic period.

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Figure 3. Global Remittances Factor

The figure titled "Global Remittances Factor" illustrates trends in global remittances (blue dashed line) and the global remittances factor (red solid line) over time, measured as standard deviations from the mean 4-quarter percent change. The X-axis spans quarterly intervals from Q1 1998 to Q1 2024, while the Y-axis measures deviations from the mean, ranging from -1.5 to +1.5, with a horizontal black line at 0 representing the baseline. The blue line depicts changes in global remittances, showcasing sharp peaks around 2000, 2007, and 2020, and significant troughs around 2009 during the global financial crisis and Q1 2020 during the COVID-19 pandemic. In contrast, the red line represents the global remittances factor, which smoothens these trends, offering a more moderate and aggregated view of the overall pattern. Key observations include a sharp decline in both lines during the 2008–2009 financial crisis, followed by a drop and recovery in 2020 due to the economic effects of the pandemic. After 2020, both lines stabilize near the baseline, with the red line reflecting long-term trends through smoother transitions compared to the more volatile blue line.

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Figure 4. Drivers of global remittance growth

The figure titled "Drivers of global remittance growth" has two plots. The top plot illustrates the contributions of various shocks to deviations in global remittances, measured as standard deviations from the mean 4-quarter percent change, between Q1 2005 and Q1 2013. The data is presented as stacked bars representing different types of shocks, with a black line overlay showing the total deviation. The X-axis spans quarterly intervals from Q1 2005 to Q1 2013, while the Y-axis measures standard deviations from the mean, ranging from -1.5 to +1.5, with a horizontal black line at 0 indicating the baseline. The stacked bars are color-coded: dark pink with white stripes for global activity shocks (overall economic activity), dark green crosshatched for global financial shocks (market conditions or crises), yellow for global remittances shocks (specific to remittance flows), and blue for idiosyncratic shocks (unique to specific countries or regions). Key observations include a pre-crisis period (2005–2007) with positive deviations driven primarily by global activity shocks (dark pink with white stripes) and global remittances shocks (yellow), where the black line remains slightly above the baseline. During the global financial crisis (2008–2009), significant negative deviations are evident, primarily caused by global financial shocks (dark green crosshatched) and global activity shocks (dark pink with white stripes), with the black line dipping sharply below -1.0 standard deviations. In the post-crisis recovery period (2010–2013), contributions from shocks stabilize, with global remittances shocks (yellow) and global activity shocks (dark pink with white stripes) regaining prominence, while the black line hovers near the baseline, indicating a return to normalcy in global remittances.

The bottom plot depicts the contributions of various shocks to deviations in global remittances, measured in standard deviations from the 4-quarter percent change mean, over time from Q1 2017 to Q1 2024. The X-axis represents time in quarterly intervals, while the Y-axis measures standard deviations ranging from -1.5 to +1.5, with a horizontal black line at 0 indicating the baseline. Stacked bars in different colors represent the contributions of specific shocks: dark pink with white stripes for global activity shocks, dark green crosshatched for global financial shocks, yellow for global remittances shocks, and blue for idiosyncratic shocks. A black line overlays the bars, representing the total deviation across all shocks. Notable observations include fluctuations around the baseline, a sharp drop in deviations during Q2 2020 associated with the COVID-19 pandemic, and a subsequent recovery where deviations gradually stabilize by 2024, with global activity shocks (dark pink with white stripes) and remittance shocks (yellow) contributing prominently during the recovery phase.

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