Remittances are money transactions across national borders by migrant settlers, workers and students to their home country. On every consequent year, world remittance is colourfully on the rise as the scale of migration between countries is ever on the rise. People from developing countries migrate to developed countries for better job opportunities and living conditions resulting in increased international money transfer.
In some countries, the remittance inflow sometimes exceeds the flows of foreign direct investment (FDI). Remittances become crucial in developing economies, contributing to more than 10 percent of GDP. Exactly how? How can remittances help in the economic growth of a country? Let’s see!
Advantages of remittances
- Money received through remittances directly goes to families. As a result, there is a lesser risk of money wastage or political corruption, as in foreign investments. Thus, have an effective influence on the country economy by dropping the level of poverty.
- As far as savings are concerned, remittances often become the key source of foreign savings for low-income countries.
- Remittances can evidently increase the GNI (Gross National Income) of a country and add to the real purchasing power.
- Higher remittances flow will automatically increase liquidity in financial markets. With the rising liquidity in the finance sector, there will be a considerable decrease in the interest rate, which will eventually lead to the expansion of credit and investment in developing countries.
- Considering the never-ending love for the family members in the home country. In most cases, foreign settlers offer funds for business start-ups initiated by their family members and relatives. Even they themselves transfer money to buy a shop or so to start a business upon retirement into their nation. New businesses will obviously have an impact on the country economy.
That’s it! That is exactly how a country’s economy gets boosted with international remittances. Conduct overseas money transactions at the best online money transfer in Australia and contribute sufficiently to the economy of your home country and the economy of the world as a whole.